KINGSTOWN, St. Vincent – The International Monetary Fund (IMF) is yet to issue its report on the local economy, almost three months after it completed Article VI discussions on economic developments and macroeconomic policies.
And Opposition Leader Arnhim Eustace says the delay suggests that the Unity Labour Party government is negotiating with the international body what medicine should be prescribed for the local economy, which has registered an unprecedented three years of decline.
At the end of its Aug. 10-19 visit to this country, the IMF said in a statement that the Vincentian economy was “facing a challenging year”, noting the impact of Hurricane Tomas last year and flash flood in April.
Economic activity contracted by 1.8 per cent last year, and the IMF said the economy is “expected to remain subdued this year despite some pickup in reconstruction activity”.
It further stated that growth is expected to recover in 2012 and reach its potential level of 3.5 per cent over the medium-term, “provided recovery in advanced economies does not stall”.
But Eustace said on Monday that the delay in the IMF report is “strange”.
“[This] suggests to me that there is a difference between them and the government,” the former prime minister and minister of finance said.
“It normally doesn’t take so long to get to the board,” said Eustace, a former Caribbean Development Bank executive.
Eustace said he “expected trouble” because “the state of our finances … are not good.
“And having had three consecutive years where the economy didn’t grow at all, the IMF will be looking at programmes in relation to growth,” he added.
“What the IMF tries to do is come to agreement with the government and say what the measure to be taken are. And by the time they get to their board, they would have known how the government is thinking and include that in their report.”
Eustace pointed to Barbados, where the IMF mission, before leaving Bridgetown, announced that the Freundel Stuart government would freeze wages and salaries for two years.
“The Barbados report ain’t gone to the [IMF] board as yet but because the mission that went to Barbados had already reached an agreement with the government on that proposal, they announced it before they left the country, even before they carried it to the board,” Eustace said.
Eustace believes that there are “some outstanding issues” which the IMF is trying to resolve with Kingstown.
“I don’t know if reality has come home to this government as yet. The reality is going to come home to people in this country who really felt that everything was fine and dandy and now find themselves at home with no job to do,” he said.
Eustace said that more Vincentians would become employed as an increasing number of local properties are sold.
“I was sent another list yesterday of properties that are now on the market to be sold and a couple of them really shocked me. I am talking about businesses. I am not talking about houses,” he said, adding the sale of houses was “ a major problem already.”