IMF loans - No strings attached?
According to the International Monetary Fund (IMF), as a condition to its $250 million loan to The Bahamas, this country must hit an average of $500 million surplus beginning with the 2024-2025 budget. This means that the government’s recurrent revenues must exceed its recurrent expenses by $500 million.
According to Former Minister of State for Finance James Smith, The Bahamas achieving this goal is akin to defeating Jamaican track legend Usain Bolt. I say that’s putting it mildly! This is like toying with the kiss of death.
The total proposed 2020-2021 Recurrent Budget is $2,574,104,525. Of this:
25.2% is for wages and salaries
15.4% is for interest (on Loans)
2.6% is for Employer Social Contributions
15.8% is for Subventions to Corporations
That’s a total of 59%, which means that the Government only has 41% of its budget to run its day to day such as buying supplies and paying utility bills.
So where is this $550 million coming from? Just Ask St. Lucia. In May, the Minister of Economic Development announced as part of the IMF COVID 19 Loan Conditions, the country will have to decrease the amount of its Public Officers. In 2017, as a Condition to an IMF loan, Barbados was forced to reduce the number of public officers by a third. Jamaica was forced to do the same as many other Caribbean countries.
Smith said it best when he stated, "It's almost like a warning that unless something substantial happens with the economy, they're [IMF] telling you they'll be down here to impose some conditions on you.”
What are those conditions? You better be sure that it will include a substantial decrease in the number of persons employed in the Public Service and a reduction in social spending – the hallmarks of IMF conditions.
What a burden the most vulnerable will have to bear.