The government of Barbados recently announced that it will not renew the current arrangement with the International Monetary Fund (IMF). There will be no BERT III BUT Prime Minister Mottley will maintain a “speed dial standby” connection, whatever that means. Lest we have forgotten, the Mottley government on winning the 2018 general election pursued the IMF option “due to significant economic challenges, including a high debt-to-GDP ratio, declining international reserves, and a struggling economy”.
Prime Minister Mottley was quoted in the press that the IMF arrangement was a success but “the government recognises the need for flexibility in the face of potential global economic challenges“. Many Barbadians directed vitriolic comments at the IMF forgetting that Barbados is a willing member of the fund and voluntarily triggered its involvement in 2018 after triggering a selective default(SD).
Although it is fair to say the economic state of the country has improved mainly due to a rebound in tourism post COVID. Key economic indicators confirm that Barbados remains a heavily indebted small country with GDP north of 100, a national social security system groaning under the weight of mismanagement and an ageing population, unstructured management of public pension fund, a decaying physical infrastructure; roads, water system, waste management etc. Although foreign reserve balance is ‘heathy’ it is mainly as a result of borrowing and not earning. It will be interesting to see the results of the decision to enter the capital markets in June 2025 post IMF and BERT program. Barbados does not have an investment grade.
Sensible people have to question Mottley’s decision to distribute millions of dollars to Barbadians under the guise of ‘sharing the bounty’. Sharing what bounty what! Barbados is in no position to share bounty given our current economic state. The blogmaster opines that it is fiscally irresponsible and sends a wrong message to Barbadians. We are a people already addicted to consumption behaviour and the message government should be sending is the need to change attitudes and behaviours given our present circumstances. Nothing has changed, we are still operating with a one-leg economy.
Could this be a naked grab by Mottley to feather popularity with a gullible public with a general election looming? The recent win by the Barbados Labour Party in St. James North should be seen for what it is – in the land of the blind a one eye person can be a queen. The main political opposition – Democratic Labour Party – remains ineffective with little or no credibility with an apathetic public. Talking heads like Wickham should hush.
Now that the optics of being entangled with the IMF has forced the termination of the relationship it will make for interesting times. Do we have the will to impose fiscal self discipline to prevent having to speed dial the IMF? A usually optimistic blogmaster is uncertain in this instance.
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