Nations seek aid from the International Monetary Fund (IMF) because they struggle to pay foreign debts. Also, their creditors will not negotiate a new payment scheme without a tertiary entity —that is the IMF.
This unfavourable situation occurs primarily when expenditures exceed revenues for too many periods and financing the difference consistently cannot be continued.
Second, despite the wherewithal to be resourceful, government administrations didn’t control spending and increase revenues. What exacerbates this are increasing crime rates and institutional and systemic corruption that are deterrents to foreign investors.
In six fiscal years, the T&T Gross Domestic product continuously declined, with evident projections of no improvements. A crisis is looming due to a lack of policies that promote growth and investment. Economic growth is crucial to generating revenues to assist the servicing of debts.
In April, a nearby Caricom colleague found itself in the same situation. That is Suriname. Likewise, we are a diminutive open economy, extremely reliant on highly volatile commodity prices for our revenues.
Suriname’s pathway to recovery might also be our own unless this current administration acts expeditiously. Suriname has been given marginally stringent measures from the IMF. Pending the end to the Covid-19 pandemic, the time to a return of economic stability is uncertain.