Barbados Prime Minister, Freundel Stuart on Wednesday rejected a suggestion from former Prime Minister Owen Arthur that the island-nation has no option but to go to the International Monetary Fund (IMF) for assistance in dealing with the ailing economy.
Speaking in the parliament on the debate of the 2017-2018 Estimates of Revenue and Expenditure Arthur, an economist, who served as prime minister from 1994-2006, said that the move to the Washington-based financial institution was inevitable and warned that the country could not tackle its BDS$3.3 billion dollar (US$1.65 billion) debt crisis on its own.
But Stuart has insisted that his administration would not go the IMF route – at least not now.
Stuart said Barbados was not bulldozed into becoming a member of the IMF and there is no fear of the international financial institution but he sees no need to seek them out at this time.
But he also admitted that the country was spending more than it was earning, which has led to enlarged debt and the excess printing of money. He said though the administration had tried to keep the deficit at a manageable level, he agreed that they had over a prolonged period failed to do so.
Stuart said his administration needed to enlarge debt in order to sustain local development.
“Given the context in which we have been operating, over the last few years, in the wake of this crisis, in the wake of losing a billion dollars in corporate tax revenue, we have had revenue challenges while our expenditure has been fairly consistent.
On the issue of the possible devaluation of the Barbados dollar and the recommendation for the local currency to be pegged to a basket of currencies instead of the US dollar, Stuart insisted that there will be no devaluation and the currency will remain pegged to the US dollar.
“Our peg to the US dollar has served us well ever since 1975. It has made our business transactions certain; our business people have been able to rely on it. Our citizens have been able to rely on it.”
He said that the administration should respond to events instead of reacting to them in order “take the decisions you consider to be in the best interest of the country.” – CMC