Countdown to the End of Barbados’ IMF Program
Government will be forced to decide the fate of Barbados very soon as the decision to enter into another International Monetary Fund (IMF) programme will be publicly known in some days ahead. In my analysis the Prime Minister may seek to table the proposed changes in legislation before September 30th 2022. In the press conference hosted by the PM she indicated that the NIS is not in crisis really but we must act now to save it. The rush to amend pension is the government following the dictates and timelines imposed by the BERT plan endorsed by the IMF.
Prime Minister Mia Mottley on May 13th 2022 told reporters at Ilaro Court that the current programme would end on September 30 , 2022 and discussions would begin once the mission report “passes the board” at the end of June.Mr. van Selm said Barbados had reached a staff level agreement with the EFF, following its latest review and once approved by the IMF Board in June, the country would have access to US $23 million in funding.
From the recent NIS political showcase with Actuary Derek Osbourne which caused serious civil & societal discomfort across the country . The GOB is going ahead to alter pension to meet the draconian proposals agreed to by signing the IMF program back in 2018. Pension reform is one of the major agreements the government agreed to enact and to date the government has not lived up to it’s end of the bargain with the iMF as the current IMF program winds up in 23 days and pension reform is still due.
The odd timing chosen by the Prime Minister to raise the NIS and pension reform conversation was not to sensitize the public about the NIS which she categorically stated is not in crisis but we must act now to save it was but a cliche is to hide the force and pressure being applied against Barbados to live up the agreement made with the IMF within the specific dictates and timelines imposed. This is why Bajans may have to work to 72 through no fault of their own.
My prediction is that the government may move swiftly to amend the pension before September 30th to avoid running over into the end of the IMF program. If no decision is made by then this will be an indication of the government’s intent to indeed enter into another IMF program come September 30th and pension reform will be a high priority requirement for the government to enact in the next program. The next program will be more difficult than the first including more cuts to jobs, deeper cuts to pensions especially non-contributory , cuts to SOEs, increased taxes and levies on government services, cuts in budgets to all ministries and to also privatize more government assets such as the GAIA airport which being leased out to an unknown we speak for 40 years and the water authority which is undergoing serious changes to it’s operations as we speak .
Prime Minister Mottley said that “From July, we will start discussing. Will we have a successor programme? If so, what type of successor programme? Will we go it on our own or is it time or is it right to go on your own when interest rates are rising globally? Or do you stay in the comfort of concessional interest rates by having a programme or working closely with the other regional development banks and international financial institutions . July and August passed and no discourse took place
The Prime Minister of Barbados mentioned the possibility of a roadshow in September to start to tell our story to the capital markets pointing out “whether we go back into an IMF Programme or not, we believe that our story, which is a credible story, has to be told, in order to be able to…get our way back to investment grade. Barbados was barred from capital markets because of the voluntary international debt default by the Mottley government in 2018 and in 23 days September comes to an end therefore the public should monitor social media over the next 23 days starting september 7th for comments from the Prime Minister surrounding Barbados’ fate in regards to signing another IMF program and proposed NIS reform.