University professor says country needs strong fiscal management law

Noted university Professor Dr Justin Robinson has called for the introduction of a “strong” fiscal management law that will force the Government to exercise fiscal control, even as he gave the Mia Mottley administration a passing grade for its management of the economy during the COVID-19 pandemic.

Pointing to the historic rise and fall in economic growth over the years as the country battled external shocks, Robinson said one of the main ways to quickly adapt is through a build-up of foreign exchange buffers while adhering to financial management rules.

“In terms of growing despite COVID, I would argue that we need strong fiscal and financial management rules that allow us to build up fiscal buffers to mitigate the impact of these external shocks . . . . I am arguing that we need a legislative framework that allows us to maintain fiscal discipline outside of an International Monetary Fund (IMF) programme,” he said as he addressed a Rotary Club of Barbados lunchtime webinar on Thursday, under the theme Economic Recovery In Spite of COVID.

The University of the West Indies (UWI), Cave Hill professor, who insisted that some level of borrowing by the Government was necessary, added that strong fiscal management would help build the needed international reserves.

“We need to build buffers so that we can respond to those shocks without…growth-destroying and painful fiscal adjustment measures,” Robinson insisted.

“What if we had an economy with buffers that we could get through these periods here without such large declines in growth because we have the buffers to run counter-cyclical fiscal policies? What if we have a legislative framework that avoided us having fiscal shocks that we created ourselves in addition to the external shocks?”

The university academic pointed out that often Barbados and other countries maintained fiscal prudence while involved in an IMF-back programme, but after that “there is then a relapse”.

He explained that once a fiscal responsibility law was in place, governments would need to go to Parliament if they “wanted to go outside of the parameters set in that law”.

“There is always going to be politics, but a strong fiscal responsibility and financial management legal framework, I think, allows fiscal policy to operate within these strict walls. So, politicians and political parties can debate about their policies but your policy impact must lie within those walls, rather than politicians really trying to out-compete each other to offer things that we can’t pay for,” Robinson said.
marlonmadden@barbadostoday.bb