Warning for MSMEs as government seeks another IMF loan – NationNews Barbados – nationnews.com

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Director of the Sir Arthur Lewis Institute of Social and Economic Studies (SALISES), Professor Don Marshall – FP

A university economics professor has warned people working in micro, small and medium-sized enterprises (MSMEs) that the Barbados government may find it harder to help the sector when the island heads to the International Monetary Fund (IMF) for another external financing mechanism. (EFF).

The director of the Sir Arthur Lewis Institute of Social and Economic Studies (SALISES), Professor Don Marshall, told the Barbados Small Business Association (SBA) state of industry conference on Tuesday that the logic often brought even by the new era of the IMF contrary to what other countries are doing in their economies and to stimulate small businesses.

“IMF loans come with restrictions on your public policy maneuvering,” Marshall said. “I have nothing against a government that says, ‘based on the options available to me, I will go to the Fund to seek to protect and correct my public finances’.

“However, I ask after the conditionalities because austerity binds the conditionalities, that is, they engage in spending, subsidies and research and development, they sponsor it deeply and that is the kind of state intervention that the IMF denounces.”

Earlier this month, Prime Minister Mia Mottley announced that Barbados would seek a new IMF loan deal, telling citizens “these are indeed rough waters”.

Marshall said while there was a need for the government to fix and maintain its public finances, it also needed policy space to help the MSME sector.

He said the Prime Minister was known for “advocating quite well on the international stage for greater fiscal and development policy space”, suggesting the same was needed for MSMEs here to thrive.

“Political space is essential, but the Prime Minister has a free hand,” said the university professor. “As Minister of Finance, she is surrounded and stripped bare by a coterie of individuals, so imbued with a particular reading of development that they begin with the fiscal and end with the fiscal.”

Marshall told the event, which was part of Small Business Week 2022 activities, that while other countries were engaged in deficit spending in an effort to lift their economies out of the “deep economic quagmire in which we we find”, Barbados continued to speak a different language.

“The advice is against swinging the pendulum,” he said. “The advice is that we need to embark on achieving a 1% surplus, and in the previous BERT it goes up to 6% – which is great if we’re running a company…

“But that’s completely at odds with what’s required now if you’re running a country, especially a country that has to move in the direction of engendering a value-added philosophy, and that has to diversify, etc.”

Marshall wondered if similar attention was really given to the “transformation” aspect of the BERT program.

“I always remind them what about development, what about the T in BERT – Transformation?” He asked.

“Transformation requires a level of state intervention, a level of partnership with elements of the private sector…that is never envisioned by IMF teams past and present.”

The political economist said that while there are opportunities for small businesses to cement their place in the global marketplace through the use of technology without depending on any government, he argued that culture was always a major setback.

“At some point, you come from culture, you come from attitudes and you come from merchants of doubt and opposites, and you ask yourself, ‘where did that come from?’ He asked.

“Whereas your counterparts in other spaces are not surrounded by naysayers and merchants of doubt. This explains why global capitalism does not present a neutral space for all companies and all countries to succeed at the same time.

Marshall said while the focus seemed to be on innovation, there was an apparent lack of need to pursue “some kind of value-added ethos.”

“When I look at Barbados, I’m not sure we can talk about a society and an economy that reflects this philosophy of adding value,” he said, adding that companies and countries that are doing well were those where there was “value—an added philosophy that drives innovation, that thrives on creative disruption, that thrives on creating greater value for customers.”

The University of the West Indies professor said now is the time for Barbados to leapfrog the status quo of finance, import trade, insurance and property prospecting for development if small businesses are to thrive .

“I think we’re very good at replicating the status quo,” he said. “We’re getting great at it, and it’s a cultural thing.

“It’s nothing you can deal with in a strict political sense, unless we’re talking about an enterprise of social transformation that starts with education, that starts with reassessing the way we see entrepreneurship , the reassessment of how we see education on all fronts.”

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