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Government, private sector could strike out reciprocal debt – IMF


International Monetary Fund (IMF) officials have suggested that the government and the private sector work together to strike out reciprocal debt.{{more}}

While speaking at a press conference on Tuesday, which marked the end of IMF’s article IV consultations, advisor for the Western Hemisphere zone Elie Canetti stated that his team had met with several members of the private sector to discuss their assessment of the economy.

“I would say, there are a few impediments. I referred briefly to the arrears from the government and in some cases, those are arrears to private business and also to state owned enterprises. I would say some businesses…express a concern

that that causes them problems with cash flow and therefore, maybe they can’t invest as much as they would like,” Canetti revealed.

However, the advisor further noted that while the government owes money to the private sector, the private sector also owes money to the government.

“By the same token – I’m sure if I didn’t mention it, the prime minister would — the private sector owes a lot of money to the government and so…one of the things that we have recommended, which takes place already to some extent, but which we would say need to be more systematic, is that we would look for areas where if there is a private business that owes money to the government, that the government owes money to, it should be scoped and let off those obligations and that would remove some uncertainty for that business.”

In his report, Canetti also highlighted other concerns that were pointed out by members of the private sector. These include gaining access to credit and fears of investing in the tourism sector.

“We’ve asked a lot also about the tourism strategy and the question, for us, is not only businesses that are in the tourism industry; what’s the impact of the airport, but also agricultural manufacturing? Also we are trying to see, are you preparing for what we hope will be a game changer for tourism?” the advisor said, in reference to the soon to be completed, Argyle international airport.

“I think there is still some uncertainty in the business community about when will

the airport be done and so I think that is to some extent holding back investment and maybe holding back confidence.”

Canetti pointed out that access to credit for small and medium-sized enterprises is an issue in several countries, not excluding St Vincent and the Grenadines.

“It’s something that we see everywhere. I think there’s only so much that can be done. Banks tend to rely on customers that they already have. Credit unions here are quite large, so maybe there is some scope over them to provide increased access to small and medium enterprises,” he said. (BK)