Former Barbados Prime Minister Owen Arthur does not believe that the Washington-based International Monitary Fund (IMF) by itself can solve the economic problems facing Grenada and other Caribbean countries.
Arthur made the observation while delivering the 15th annual Sir Archibald Nedd Memorial Lecture that was organised by the Grenada Bar Association (GBA).
The topic of the lecture was: “Can the prescriptions of the IMF solve the economic problem of the Caribbean?”
The Ex-Bajan leader indicated that the execution of the new type of IMF programme is really based in large measure to require great sacrifice and discipline which will cause some pain to the islands.
As part of putting the country’s fiscal house in order, the cash-strapped two-year old Government of Prime Minister Dr. Keith Mitchell embarked upon a three year Structural Adjustment Program (SAP).
IMF has committed to provide Grenada with US $21M through the life of the programme.
Arthur observed that Grenada’s arrangement with the IMF is not intended to provide the country with all of the financial resources to finance its way out of the debt and crisis that the country faces.
“The IMF lending alone cannot stabilise the Grenada economy,” he told the audience.
The former Barbadian Prime Minister indicated that the resources to bring about the fiscal stability sought by the IMF program will have to come not just from the IMF funds, but by the success of the measures the government will seek to introduce to generate more revenues, curb its spending, and to secure fiscal space through the significant debt restructuring it proposes to undertake as part of the fiscal consolidation program.
Arthur said the resources to carry out the structural and institutional reform will have to come from other institutions and agencies with whom government relates.
He said the IMF policies will only, therefore, lead to success if they function as a catalyst to unlock Grenada’s access to certain development funding.
He noted that a large proportion of the measures set out in the structural reform program will entail significant changes in existing legislation and the introduction of new ones.
As an economist, the former Barbadian Prime Minister said the generation of growth, the creation of employment and the reduction and eradication of poverty will have to come from the same resources.
He said that despite the emphasis being placed on structural reforms and growth, at the core of the IMF program is the objective of generating financial stability and solvency.
He said given the enormity of the cash flow and debt problems facing Caribbean countries, that matters relating to solvency and stability may in fact have to be resolutely addressed as a pre-condition to creating lasting conditions for sustainable growth and development.
During his hour long presentation, the former Barbadian Prime Minister indicated that the transition from the age of preferences to age of competitive self-reliance has had devastating consequences on almost every country in the Caribbean.
He further stated that the countries in the region are more adversely affected than most other regions by the economic rise of the South, especially the rise of India and China.
He said most of the capital the Caribbean region used to attract for manufacturing and the informatics industries have been diverted to these new emerging economies in the south that have embraced liberalisation.
Arthur also suggested that the region’s growth and development is also being affected by the fact that the Caribbean has been too slow to make integration a real driving force and to continue to operate as individual units.
He said it should come as no surprise that most Caribbean countries share the common features of low or no growth, and high levels of debt.
Arthur indicated that in addition to relying on economic assistance that is no longer viable, many countries in the Caribbean are bogged by overwhelming problems in terms of meeting their current expenses to provide the essential social services for their citizens.