There finally seems to be a consensus that Government’s current strategy to fix the island’s big financial and economic problems is “off track”.
If the long held view that the first part of solving a problem is admitting one exists then this is something that all Barbadians should see as a positive. For many months now, and as recent as last month’s Estimates Debate in the House of Assembly, the Opposition Barbados Labour Party has repeatedly voiced the view that the Medium Term Fiscal Strategy instituted by the current Government was the wrong plan and was not working.
What most people would consider independent experts, certainly economists not overtly associated with the BLP, have shared this view. Now, based on the disappointing economic performance in the first three months of this year, and evidence that Government failed to control its spending last year, thus increasing the fiscal deficit, Government and its advisors seem to be agreeing.
This much was clear a few months ago when the Central Bank of Barbados Governor Dr. DeLisle Worrell said “the fiscal consolidation strategy must be brought back on track, and a new medium term adjustment strategy must be implemented, using the current deficit as a point of departure”.
Then came yesterday Minister of Finance and Economic Affairs Chris Sinckler with an admission that “there was some obvious slippage in our fiscal performance from the out turn in 2011/2012” and that “we are all disappointed by this performance”.
However, the minister was adamant that the MTFS had not failed and had been impacted by a less than expected economic performance. So everyone now agrees that things are off track and there is a need to change. What next?
It would neither be surprising nor unwise if most Barbadians paid more attention to what Sinckler did not say yesterday than what he voiced in a near hour and a half media conference at Government Headquarters. Foreign exchange earnings are down, with no immediate hope of improvement in the main contributors of this important resource — the tourism and international business and financial services sectors.
There is no imminent sign that foreign investors will suddenly start pumping hundreds of millions of dollars into the Barbados economy, and Government can borrow so much and no more.
When combined with the lower than expected intake from taxes, mainly Value Added Tax, this means that Government’s revenue will not increase, and if anything may in fact decline.
And while Sinckler avoided saying it outright yesterday, on the basis that he had to first hold discussions with the Social Partnership and others, it is also clear that Government will have to cut spending or increase austerity on all Barbadians.
This much was made clear yesterday by Sinckler when he told the media: “Generally there really ought to be across the entire country a sense of fiscal discipline, a sense of financial discipline.
“As you know not only governments have high debts and high deficits, individuals and businesses can as well and we all have to find ways in which to ensure that we adumbrate our ambitions to the extent where we can meet what we have to do constructively from what we produce.”
Our view is that if “the entire country” is expected to carry the burden then the entire country should also have the opportunity to help come up with the solutions. There is no monopoly on intellectual capacity in Barbados; not the Government, not the Opposition, not the Central Bank of Barbados, Barbados Economic Society, or University of the West Indies Economics Department.
And having now all generally agreed on the nature of the problem and the fact that its original solution is off course and needs changing, what Barbados needs is a real national consensus on how we should fix these financial and economic problems that clearly will not disappear quickly.
Let’s stop the blame game and fix the things we will all continue to suffer from.