Being able to manage one’s budget without unnecessary spending or trimming the fat were some of the comments received in this week’s Business Times poll on whether or not the government should abrogate the IMF loan facility (SBA).
“We should withdraw from the programme only if we learn the value of fiscal discipline. The government should invest wisely and generate more income,” one respondent said, adding that ‘governments spend with impunity and no checks’.
Another respondent noted that foreign reserves are irrelevant unless there are laws to control Central Banks. “History has shown that foreign exchange crises are triggered when reserves are highest and the Central Bank is tempted to defend pegs through contradictory monetary policy,” he said.
Containing the budget deficit through IMF pressure can keep interest rates low, allowing the private sector to expand and people to build houses at low rates of interest. Also by keeping interest rates down without printing money, asset bubbles can be avoied, and rising land prices can be contained, according to another comment.
Calling the government foolish if it decides to discontinue the SBA, another respondent said the deal is more of a deterrent on state spending. “If the budget is not presented and another vote on account continues till December 2010 there will be unrestricted imports and spending will invariably rise leading to an overheated economy and a substantial increase in inflation,” she added.
No, another respondent said in the poll, adding: “Look at the problems that Greece has with a debt load of over 85% of GDP.”
The inevitability of the SBA ending was brought forth in one reply, voting in favour of ending the deal, “only for the reason that the IMF will certainly terminate the SBA because of the government’s inability to maintain the fiscal deficit targets.” |
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