IS THIS country going down a path of seeking emergency assistance from the International Monetary Fund (IMF)?
Such a possibility would have seemed unimaginable a few months ago. The economic, social, political – not to mention symbolic – implications of such a move are so significant as to militate against the likelihood that any government would feel at ease embracing it.
However, there are now many reasons to suggest why we should brace for this possibility.
The Government has been unequivocal in its statements that the country simply cannot afford another full lockdown. With slashed revenues and a spiralling deficit, billions of dollars have already been spent in direct assistance. And the losses continue to mount.
Consider: we have already dipped significantly into the Heritage and Stabilisation Fund (HSF). The fund was worth about US$5.7 billion in 2020, and in that year there were about US$980 million in withdrawals.
Not only are state coffers haemorrhaging, but the private sector is also reeling.
Worse yet, the signs that we would soon be forced to return to paying the heavy price of further restrictions, as announced on Thursday, have been upon us for some time.
There has been a dramatic spike that has pushed our total cases over 10,000. It is speculated that much of this is due to the arrival of an extremely contagious variant of the covid19 virus.
The one thing that could have inoculated us from further economic malaise has not materialised. We have not secured enough vaccines to be able to achieve herd immunity, whether through one nationwide vaccination exercise or several staggered phases.
Even before all of this, the economy has long been in the doldrums.
In 2015, when falling commodity prices threw the economy into turmoil, there was the suggestion that this country might return to the IMF.
Back then, the Government resisted such a move, mindful of the perception that it should stay away from the IMF at all costs. Memories lingered of the 1980s, when this country was under an IMF structural adjustment programme focusing on contraction.
Instead, an IMF technical team was invited to the country to make recommendations, many of which focused on increased taxation. The Government, however, decided to make adjustments, but from the standpoint of reducing state expenditure and wastage.
Such wiggle room, however, has closed.
We have recently benefitted from assistance from international lending agencies such as the Development Bank of Latin America. The very first batch of covid19 vaccines was said to have been funded by the Inter-American Development Bank.
The Government does not want another complete lockdown. But it may soon have no choice but to impose such a measure and resort to emergency IMF funding.
Either way, unless some miracle happens, we are in store for some bitter medicine.