BARBADIANS should prepare themselves for a deep and prolonged fiscal austerity that will be implemented under an Extended Fund Facility (EFF) with the International Monetary Fund.
Governor of the Central Bank of Barbados, Cleviston Haynes, sounded the warning yesterday as he gave the clearest idea of what an IMF programme for Barbados could be like.
He said that given the medium term nature of this country’s adjustment needs, Barbados is likely to qualify for an EFF as opposed to a Standby Arrangement.
“When a country faces inherent structural deficiencies and is able and willing to implement deep and sustained structural reforms, consideration can be given to a programme under an EFF, which typically lasts between 36 and 48 months.
Reviewing the economy for the first half of 2018, Governor Haynes said that the fiscal consolidation will be a deep one. Explaining this, he told the media that the Government had committed itself to achieving a primary surplus of six per cent of GDP – the gap between revenue and non interest expenditure, which according to him is significant.
“So if you have a surplus of that magnitude it means you need a combination of measures from the revenue and expenditure side that will translate into that type of out turn and it means some adjustments have to be made,” he declared. Governor Haynes said it is still too early to say the nature of the reforms to be done as they relate to state-owned enterprises.
His understanding though is that the Government is not focused on wholesale lay offs in the public sector, which is part of what it has said.