Imbert: Bad advice on IMF could cost 30,000 public service jobs

FINANCE Minister Colm Imbert said the retrenchment of 30,000 people from the public service would be one of the outcomes if Trinidad and Tobago approached the International Monetary Fund (IMF) for financial relief.

He said this as he opened debate on the Finance (Supplementation and Variation of Appropriation) (Financial Year 2021) Bill, 2021 in the Senate on Friday.

Imbert said certain economists continue to insist "that the Government should go to the IMF for funding."

He said those economists would not tell the population that when countries approach the IMF for funding, they have to agree or commit to certain policy adjustments.

He said the IMF has two emergency funding facilities, the Rapid Credit Facility (RCF) and the Rapid Financing Instrument (RFI). The RCF is for low and very low income countries, and the RFI for middle- and upper-income countries.

"In order to qualify for the RFI, a country has to issue an urgent balance-of-payments need or crisis which will be assessed by the IMF staff."

He said the repayment period for an RFI is between 3.5 and five years, the current interest rate is 1.05 per cent and quarterly payments must be made for the RFI's duration.

Referring to a May 8, 2020 letter which Jamaica sent to the IMF to access the RFI, Imbert said Jamaica committed to have a fiscal surplus of 3.5 per cent of its GDP.

"We wouldn't do that. We would have to generate a fiscal surplus of about $5 billion. If we generate a fiscal surplus of $5 billion, it means that our expenditure would be $5 billion less than our revenue."

He said this would mean Government's expenditure would be about $35 billion and "we would have to retrench about 30,000 people in the public service."

He said Government would have to remove all subsidies on water and electricity and devalue the TT dollar.

On devaluation, Imbert said the other commitment Jamaica made in its letter to the IMF was that "they would have to rely on the flexible exchange rate and limit forex (foreign exchange) interventions."

While it was easy for armchair commentators to tell Government to approach the IMF for funding. Imbert said, "They are not charged with the responsibility of providing for the service of TT."

Imbert also said Government is seriously considering another set of Value Added Tax (VAT) refunds "so that will put some more cash into the hands of businesses." He said this should be done within the next two weeks and the ministry has received a list from the TT Manufacturers Association (TTMA) of businesses seeking $100 million in refunds.

He authorised his staff, he said, to make the VAT refunds available to the businesses identified.

He said the ministry will see if it can widen this exercise to other associations to see if other businesses in need of VAT refunds could receive them.