The Freundel Stuart Administration has some major admissions to make to Barbadians, starting with the fact that the economy is not stable and that “there is now need for a major adjustment”.
Leader of the Opposition Mia Mottley, saying Central Bank of Barbados Governor, Dr. DeLisle Worrell, had confused the public by issuing conflicting statements on the island’s fiscal situation within the last 24 hours, said with the general election out of the way Government needed to be candid with the population, including telling them it’s Medium Term Fiscal Strategy was a “failure”. “I think that the Government needs to come to the country and … admit that things are not stable, admit that there is now need for a major adjustment. The elections are out of the way, they have won the election, … the reality is they are the government,” she said today in reaction to the Central Bank’s first quarter review of the economy, which showed a contraction of 0.4 per cent and a higher fiscal deficit. The Barbados Labour Party leader also said Worrell sought to engage in a public relations exercise during his interaction with the media today as he tried to do damage control after saying yesterday in a prepared statement that Government’s fiscal strategy needed to be put back on track and a new adjustment was required. “Six weeks ago we were being told that the economy is stable, that the Government must be given another chance and now six weeks later we were being told yesterday in the written report of the Central Bank that was released that the Medium Term Fiscal Strategy is not on the right track and that we need to get it back on the right track and indeed new language is being used now of adjustment,” she said. “But yet today the governor confused the issue by trying to insist with the journalists that we are on the right track. So that one wonders whether today was not about public relations and yesterday was about a description of the economy and the state of Government’s finances. “I am going to discount what I heard today, because I really do believe that today’s exercise was a public relations effort and go by what the Central Bank formally released yesterday in its first quarter report; and in that first quarter report it made it clear that Government’s fiscal strategy needed adjustment to be back on the right track, and indeed that is what the Barbados Labour Party has been saying for some time,” she added. Mottley said what the Central Bank said yesterday was in line with what her party had been saying repeatedly for a long time, and as recently as last month’s Estimates Debate in the House of Assembly. “If I may put it in context, Government’s fiscal deficit for the year that is now closing is in fact worse than its own worst case scenario in its same Medium Term Fiscal Strategy. Now that can only mean failure,” she asserted. “Now at the same time the governor is trying to argue today that he is taking confidence in the new Estimates of Expenditure and Revenue for 2013-2014, in other words what the House of Assembly just approved two weeks ago… “But the difficulty that we have with that is that when they project that the deficit would come in at 5.3 per cent, what they are excluding is the full liability to the University of the West Indies, the full liability to the Barbados Water Authority, the Queen Elizabeth Hospital, the National Housing Corporation and indeed the Barbados Transport Board, … it’s not the full picture. “And the Government has not yet changed the terms and conditions under which those institutions can access money from the Government, so in other words the Government is still liable for the money regardless of how much money it has voted in Parliament. They would still be liable to pay the fees for the students who go to the university, they would still be liable to provide free health care at the hospital, they are still providing the same terms and conditions to the Transport Board.” The Opposition Leader said it was now a question of how Government, and by extension Barbados, was going to “get out of this situation, … without adjusting expenditure”. “Even though you have increased the rate of the VAT you are now earning less from it this year than you did last year, so it is no longer capable of earning and helping you to improve your revenue and in fact the only way that you are going to improve Government revenue, in terms of VAT, in terms of excise, in terms of personal income taxes, corporation taxes, is by restoring growth to the economy,” she stated. She added this was “such that people are working and paying taxes, spending money and paying VAT or businesses are in fact expanding and doing better such that government’s corporation tax receipts are improved.” (SC)