The International Monetary Fund (IMF) recently published a discussion note entitled Accounting Devices and Fiscal Illusions outlining the extent to which fiscal agents in some advanced economies have used accounting practices to disguise the true picture of fiscal policy and its reporting in those countries.
It is particularly relevant to Barbados given what transpired in fiscal year 2011/2012 when the National Insurance Scheme (NIS) directly financed the day-to-day operations of the University of the West Indies, Barbados Transport Board and the Barbados Tourism Authority. This allowed the central government to report a reduced fiscal (current account) deficit. However, when we account for the fact that NIS along with the central government and several other non-financial statutory corporations all form the general government sector, then the lending by NIS must be viewed as direct spending by the central government since repayment of the loans will come from central government revenue in a future time period.
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