#BTSpeakingOut – Analysis better than sound bites

Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.

by David Brathwaite

University of the West Indies Professor, Dr. Don Marshall, has made some public assertions about the economy which deserve serious answers from all the political parties, but also from Dr. Marshall himself.

The assertions have been made against the backdrop of a general election campaign, with the implication that Barbadians are being kept in the dark about the true state of the economy, in much the same way as the Democratic Labour Party did prior to the 1991 general election.

So, in that way, they tar the current administration with the same brush as the then DLP administration, and through the mistrust thereby generated, attempt to make it pay the price for that administration’s misdeeds.

This may not be the intention, but it is surely the consequence of Dr. Marshall’s intervention.
But here are some questions that we need Dr. Marshall to answer.

Are the current economic circumstances in any way similar to the situation prior to the 1991 election when Barbados faced a massive foreign exchange crisis? I believe we now have the largest stock of foreign reserves in our history, giving us over 40 weeks of import cover, so the similarities to 1991 are lost on me.

Haven’t public debt and arrears not been reduced since 2018 by nearly $700 million from around $2 billion to $1.3 billion, and the debt service ratio from 68 cents of every dollar of GDP to 30 cents of GDP, even in the face of the pandemic? With a return to normal levels of economic activity, would the debt service ratio not decline even further simply because of the higher GDP denominator?

Under the current IMF program, was Barbados not achieving the six per cent primary surplus prior to the impact of COVID-19 on both sides of the government’s ledger, which vastly reduced revenue and at the same time vastly increased expenditure which was needed to keep the society from falling apart? Is it not the extraordinary economic circumstances caused by COVD-19 the reason we are now running a 1 per cent primary deficit instead of the planned six per cent surplus?

If we get COVID behind us, why would returning to the pre-COVID level of economic activity and levels of revenue and expenditure, which achieved the six per cent primary surplus target before, entail major adjustments in employment levels? What am I missing here?

How in the current circumstances of the economy, is the allusion to the 1,500 public sector job lost in the early stages of the existing Barbados Economic Recovery and Transformation Program (BERT) not a red herring that would scare rather than inform the electorate? No doubt, if COVID continues for an extended period of time, we will face dire circumstances and would need to extend the current IMF programme that is scheduled to end this year, or enter into a new program.

Everybody understands that.
But, the vast majority of the voting public do not have the inclination or the capacity required to ask penetrating questions. So, they tend to rely on sound bites largely from political parties to develop their perceptions of the economy.

As former DLP politician and Minister of Finance, Dr. Richie Haynes once said, “Politics is about perceptions.”

It is for this reason that we depend on sound economic analysis, rather than sound bites, from our professional economists to ground our perceptions about the economy in reality.