By: Staff Writer
June 21, 2022
Prime Minister of Barbados, Mia Mottley, said at a joint press conference with the International Monetary Fund’s managing director that without the fund Barbados would “never” have been able to stand as it is today.
Ms Mottley, speaking at a joint press conference with Kristalina Georgieva, the IMF’s MD, said: “The IMF has worked with us in a very cooperative manner, in taking a home-grown program, and ensuring that that home-grown program, which we designed, which I typically styled at the very beginning to the then managing director, Madame (Christine) Lagarde as one that needed to have something that would allow our people to have a little breakfast, before they went on a long journey has worked for us, if we had come to the point of fighting the pandemic in January/February 2020, without having done the reform measures that we had undertaken between June 2018, and then we would never have been able to be standing today as we are now.”
On October 1, 2018, the Executive Board of the IMF approved a four-year Extended Arrangement under the Extended Fund Facility (EFF) for Barbados for US$290m. The Board’s decision enables the authorities to purchase about US$49m immediately. The remainder was supposed to be available upon successful completion of seven semi-annual reviews. The EFF was augmented in 2020 to bring the value of the EFF to US$464m which would allow Barbados to purchase US$94m to “accommodate the shock” of the COVID-19 pandemic.
Barbados apparently “needed” this support because of the mountain of debt Ms Mottley said she met when she came to office. Without question Barbados was sinking deep into debt, but the jury is still out on if this IMF programme actually alleviated the problem of high deficits and debt or just masked over the COVID-19 shock for the time being.
It is of the view that no IMF loan programme could help a flagging economy that does not produce more than it consumes. What ends up happening is more debt and more bureaucrats telling you what to do in your own country.
What is lacking in Barbados is a clear sign of new vistas on the economic front. What are the new economic drivers? This is clearly missing from the IMF programme, however, the reforms- if taken seriously- may help with regard to stamping out some of the fiscal wastage, but this would only be at the margins.
While thanking MD Georgieva for “unlocking” over $650bn in special drawing rights for countries to help fight this pandemic, Ms Mottley added: “And now, the further battle which is of major importance to us in this region, that of the establishment of the resilience and sustainability trusts, which for the first time, substantially lengthens the length of time that you will lend money to our people for to our countries for with a grace period that is substantially longer than anything that we’ve seen before.”
She continued, “And let me be more specific, that we will now be able to access 20 year money with a 10 and a half year grace period, during which we would not have to pay or service the debt.
“That is an unparalleled in our experience, and that it is also available to middle income countries like Barbados in the Bahamas, who have been locked out of concessional development capital for the majority of the last 30 years.”