IMF: ROUGH TIMES

Published: Wednesday June 18, 2008

The International Monetary Fund (IMF) is predicting tough times ahead for the Barbados economy and has suggested some key actions to keep the country economically stable.

And while Government, labour and the private sector met yesterday at Sherbourne Conference Centre to come up with solutions to tackle the troubling rising cost of living, the IMF cautioned that inflation could jump to nine per cent before yearend.

The only consolation from the multilateral institution was that the spike was expected to be temporary.

The statement came yesterday following discussions between the Washington-based institution and local officials two weeks ago.

"The discussions were held against the backdrop of significant challenges arising from a weaker external environment and mounting international price pressures for food and fuel," it said.


Slowdown

The IMF, therefore projected a slowdown in economic activity for the rest of the year to 2.25 per cent down from the 3.25 per cent last year.

In addition, the IMF said the country's current account deficit would rise to 8.5 per cent from 7.25 per cent.

"With the government's options constrained by high public debt and the exchange rate pegged to the United States dollar, the mission recommended a coordinated policy response, involving the government, the central bank, and the social partners to share the burden," the statement pointed out.

Among the IMF's recommendations were:

* targeted support to vulnerable groups while still bringing down public debt;

* monetary policies should be aimed at containing inflation;

* moderation of wage demands to ensure stable prices and protect jobs; and

* strengthening of financial sector regulations and better cross-border cooperation among regulators.


Source: Nation Newspapers
http://www.nationnews.com/story/350383627072732.php