Read the IMF!!!

Despite glowing reports of success by government with the Structural Adjustment Programme (SAP) and the stiff austerity measures imposed, the International Monetary Fund (IMF) has made known its concerns over government’s policies to tackle the island’s high wage bill.

The IMF has been using diplomatic language to tell the three-year old Keith Mitchell-led New National Party (NNP) government that the attrition policy introduced to bring the  number of public officers down is a far cry from what is needed.

THE NEW TODAY is not convinced that this policy can make any significant dent on cutting expenditure.

The fact of the matter is that there is an agreement in place between government and the Pubic Workers Union (PWU) covering the 5, 000 plus civil servants.

There is no way that government can force public officers to leave the service before their stipulated time.

This newspaper subscribes to the thinking of our foremost economist, Dr. Brian Francis of the University of the West Indies (UWI) that the issue of retrenchment will have to be looked at by the current rulers at some point in time.

After doing an analysis of the situation, Dr. Francis concluded that it is only a matter of time for there to be retrenchment because the attrition policy is nonsensical in terms of cutting down on expenditure in a serious way.

It should be noted that Dr. Francis made the same prediction in Barbados where he is currently living and came in for a barrage of criticisms from the government of Prime Minister Freundel Stuart.

Three years later, the same government was forced to tell Barbadians that it had to send home 3, 000 workers in order to cut the huge wage bill and to bring expenditure in line.

Prime Minister and Minister of Finance, Dr. Mitchell will be mindful of what the IMF officials are saying to his government in coded diplomatic language.

The PM made a very interesting statement in a letter dated, November 3, 2015 to the female head of the IMF, Christine LaGarde on Grenada’s commitment to implement austerity measures to tackle the island’s fiscal situation.

He said :  “…. If necessary, our government stands ready to take any additional measures that may be required”.

The IMF is now saying that the wage bill is too high and needs to be tackled as a matter of priority in order to ensure that the gains of the last three years are not eroded.

As a politician, Prime Minister Mitchell will be mindful of the fact that he has to face the electorate every 5 years to renew his mandate based on the democratic rule of law under our Constitution.

It will be a foolish politician to send home workers at this stage and at a time when preparation for the next election is occupying the minds of both major political parties on the island.

The NNP will also be conscious of the fact that it campaigned on  a platform of job, jobs and more jobs for locals through the investors who were lined up to come into Grenada once the party was voted back into office in the February 2013 poll.

The jobs have not been forthcoming as the Prime Minister himself admitted in the 2016 budget presentation in November that unemployment moved from 28.9% in 2014 to 30.4% one year later.

It is probably the first time in Dr. Mitchell’s political life that he has found his hands tied in providing jobs for his supporters.

In addition, he has not been able to do any significant borrowing of funds on the international market to engage in those type of questionable projects like the Poultry Project at St. Mark’s, the Garden Group of hotels in the south and the Call Centers.

A reputable bank will be hard-pressed to lend money to a government that is really financially broke.

Grenada’s financial situation will face the current rulers in the next few months as millions will have to be paid out to the U.S bondholders that did not get any payments on their outstanding loans since 2013.

The last payment to the bondholders came under the National Democratic Congress (NDC) government of Tillman Thomas.

The treasury was hard-pressed to pay these creditors and civil servants in the same month.

Unless, the NNP administration has money coming from some unknown source, it will be difficult to make the payments and at the same time maintain this bloated civil service.

It is our view that the government would seek a new mandate as  early as possible and then hopefully implement what PM Mitchell told the Head of the IMF:  “,,,Our government stands ready to take any additional measures that may be required” to address the fiscal situation including a further cut in expenditure.

THE NEW TODAY holds the view that whichever party forms the government in the next general election will have to seriously address the huge monthly wage bill and stop playing games with the country’s finances.

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