The International Monetary Fund Executive Board released it expected gloomy report on Barbados’ economy last week, following its annual consultation. As readers know, the IMF Staff Report, which is a longer review of a member country’s economy, is published fairly soon after the IMF “staffers” come out to the country to meet with local officialdom.
After that, the IMF board meets and sends out an executive summary of the findings of the staff report and the board’s own recommendations.
The tone of this year’s press release had a sort of finality to it, as in “this is it, folks,” which we have also felt reading Standard and Poors’ and Moody’s Investor Services reviews and comments over the past twelve months. Both of those ratings agencies now have Barbados’ debt one notch above junk grade and the outlook as negative.
The IMF joined the dirge last week in perfect, if depressing, harmony:
“While cushioning the impact of the crisis, the authorities’ policy response has put pressure on public finances and further raised the public debt. Directors saw as the main challenge the need to undertake a credible fiscal consolidation without jeopardizing the fragile recovery and social cohesion.”
And so, nearly fourteen months after the death of David Thompson, the country continues to head toward economic disaster in the form of ratings downgrades.
To be sure, the “difficult global economic conditions” noted by the Fund are the main cause, and giving credit where it is due, the ministry of tourism and its marketing arm, the BTA, must be given credit for playing a key role in getting our tourism numbers up by eight percent over last year.
If there is some kind of hope for us as we go into 2012, it may be that the DLP is now convinced that it is walking its own political Green Mile if it doesn’t change its leader soon.
With elections up to thirteen months away, I fear too much damage will be done to the economy if Freundel Stuart is allowed to remain at Bay Street.
I have never seen a prime minister so publicly aloof, so unwilling to communicate the goals and challenges of his administration as I have witnessed from Mr Stuart. It is agonising.
In a press conference yesterday the PM responded to the alleged efforts to get him to demit office gracefully rather than be pushed, by saying, essentially, that only dead men don’t talk. Pardon me, Sir, but have you ever heard of the Chase Vault and the other one at Vaucluse, Mr. Prime Minister? Plenty of “talking” went on in them, some say.)
But it is unthinkable that any prime minister could continue long in office if a large majority of his MPs want him to go.
So, hopefully, we will soon have a new prime minister in Chris Sinckler.
The current minister of finance would then have a year to see if he can use the traditional dual role of prime minister and minister of finance to inject some confidence into the economy.
At least something would be done to revive the office of the prime minister, which is close to self-abolition through lack of usage.
Going into the election we would then have a clear distinction between the policies of Owen Arthur and Chris Sinckler as to the way forward for Barbados.
For Barbados’ sake, may the best man win.
Noted: The IMF in its press release ignored two published numbers put out by the Central bank of Barbados in the latter’s third quarter report.
First, the bank’s decision to understate the unemployment rate, based, as the bank said, on “all available evidence” that the tradition of taking the mid-point of the unemployment range did “not appear to be consistent” with earlier quarters.
The Central Bank had said, “The rate of unemployment was around 11 percent for end-September.” The IMF simply said, “the unemployment rate almost doubled from 6.7 percent in 2007 to 12.1 percent in June 2011.” End of story.
Second, in relation to the total public debt, The Central Bank had said, “When the debt owed to National Insurance is taken into account and government-held assets are excluded, the public debt stood at approximately 96.2 percent of estimated GDP by the end of the nine-month period.”
What? Why not include government-held assets”? Wasn’t that the mantra of the incoming administration three years ago, to bring to book all government debt, like the money spent on assets such as Hotels & Resorts Ltd?
The IMF ignored that too. It said “At the end of FY2011, total public sector debt was 117 percent of GDP, up from about 90 percent of GDP two years earlier.” End of story.
I wonder how it must feel for the figures officially reported by a central bank of a country to be simply ignored by the Fund without explanation?