As our friend Amit at Pull! Push! blog says, “IANAE – I am not an economist”, so I’ll leave the in-depth analysis of the IMF’s latest press release and former Prime Minister Owen Arthur’s recent rant to folks who know more than I do. (Like Living in Barbados who lives and breathes economics.)
That said, I’ll publish yesterday’s IMF press release about Barbados and make a few totally uninformed comments by an ordinary person who has in the last year seen their cash savings go to nothing. It didn’t take much for Shona and I to go from comfortable to living from day to day. Some serious car repairs and helping out someone in worse shape than we are for a month when they lost their business was all it took to empty the bank account. With the increases in food especially and some other must-haves, our savings aren’t going to return anytime soon.
Here are a few observations about the IMF press release…
IMF Praises Barbados Government
This is the standard opening for any IMF press release. The guys who work at the sharp end of the IMF are no fools. They know if they don’t go with this “Praise the Government” opening, the next time they stay at the Hilton someone will pee in their soup. Really.
The first rule of life is “Always treat the kitchen staff and food servers with respect.” Some folks take a long time to learn this vital life rule, but like I said – the working folks at the IMF know what it means when the waiter asks, “Sir, is the soup salty enough?”
The IMF says “More taxes, more broadly applied” AND “raise the private sector’s willingness to invest in Barbados.”
Once again, IANAE, but I’ve always believed that more taxes equal less willingness to invest in Barbados.
OK, tell me I’m wrong. I can take it.
Reduce Government Spending
Easy for the IMF to say. Fact of life on this rock is that over 50% of the population is on the government payroll in one form or another.
Think about that fact, then couple it with our culture of entitlement, low productivity in both the private and government sectors and the attitude “guvmnt gon fix”.
No Sir… it’s not like the DLP government is engaging in a bunch of spendthrift mega-projects like the BLP did. The DLP Thompson government was left with a broken infrastructure because Owen Arthur, Mia Mottley and the gang blew it all during the good years and ignored the basics.
Like water coming out of taps.
So the IMF can whine all it wants about reducing spending. There is only so much the PM can do and only so far that he dares to go. That’s a fact.
Owen Arthur says Barbados should spend it’s way to prosperity!
Yup, that’s pretty well what he said the other night at UWI. That’s a photo of Owen talking courtesy of Ian Bourne at the Bajan Reporter.
I’m not sure but it looks like the former Prime Minister needed a bottle of water during his speech. That is water, isn’t it?
Ian Bourne has a first person account and says that Arthur and Mottley are true lovers once more or something like that. If true, I don’t think that Owen was drinking bottled water during his speech!
The big IMF message: It’s all out of control
Ok, you go ahead and read the IMF statement below and see what the members of this great international old boys’ club have to say. Just remember: the folks who are issuing the advice are so closely connected with the ones who caused the current economic meltdown that only conjoined twins could be closer.
And that is the way I see things from near Grape Hall on a sleepy Saturday morning.
Statement by an IMF Mission to Barbados
Press Release No. 10/66
February 26, 2010
Marcello Estevão, chief of an International Monetary Fund Mission to Barbados, issued the following statement today in Bridgetown, following a five-day staff visit:
“Barbados has been severely affected by the global economic crisis. In particular, the deep global recession has curbed tourism, affecting related activities such as construction and trade which, in turn, depressed aggregate demand and raised unemployment. As a result, economic activity contracted significantly in 2009 after remaining broadly stagnant in 2008.
“Despite these hardships, policy moves and other developments have limited the adverse effects of the crisis. International reserves are at comfortable levels, among other things thanks to a successful foreign debt placement last year and the SDR allocation. In addition, authorities implemented measures to alleviate the impact of the crisis on the population. However, as a result of these measures and, more importantly, of the economic cycle, the fiscal deficit surged, and the public debt now stands above 100 percent of GDP.
“Looking forward, while economic activity in Barbados will improve as the world economy gradually expands, the recovery’s timing is quite uncertain. In particular, significant improvements in labor market conditions in major developed countries will likely lag the rebound in economic activity and curb international travel. Despite this uncertain outlook, the high level of public debt limits the room for further government spending. Moreover, the high degree of openness of the Barbadian economy limits the impact of changes in government spending on domestic economic activity.
“Against this backdrop, fiscal consolidation seems to be the appropriate strategy. Reducing government spending, increasing tax collection efficiency, and broadening the tax base would support the exchange rate regime and improve the government’s balance sheet. Moreover, credible and sustainable measures can actually raise medium-term growth, as better debt dynamics and lower pressure on external reserves would raise the private sector’s willingness to invest in Barbados. Thus, the authorities’ intention to push forward a medium-term fiscal consolidation strategy is very welcome.”