The Barbados economy is sick and needs to be treated like a rotten tooth, says economist Dr Clyde Mascoll who has suggested that even before the Freundel Stuart administration could get to work on restructuring the economy, it first needed to implement a stabilization programme.
Speaking on the topic There is Only One Way Out at their 54th annual general meeting of the Barbados Employers’ Confederation (BEC) today, Mascoll also contended that Government was taking the economy through “a no entry sign” and needed to change course quickly.
Presenting figures on the economy for the past four decades, Mascoll said the current administration had “abandoned the Barbados economic model”, and maintained a deficit on the current account since 2008/2009 to present.
“There is one way out and it requires reversing out of the no-entry sign first, because you cannot restructure an economy in this type of condition,” he said.
“Barbados’ economic model therefore has always been that we are willing to tolerate high taxation in return for access to education and health care. We have always had the highest tax ratios in the region for a reason. They made us the number one developing country on the basis on our social provision, not on the basis of our economic growth,” explained Mascoll.
The Opposition spokesman on economics also accused the ruling party of ignoring the lessons of past recessions, especially the one of the early 1990s.
Mascoll said the refusal to employ the lessons learnt had caused the country to grapple with a much longer period of economic stagnation than it deserved; therefore the economy was now “allergic” to growth.
“I am not so sure if the diagnosis has been the result of a full examination of the economy’s heart, its liver, its kidneys, the prostate, et cetera . . . there is no need for an assessment by an independent doctor. There is a need for an independent assessment by any doctor,” said Mascoll.
“The allergy came from the unusual response from the Government of Barbados from as early as 2008 when taxes were raised in the face of a declining economy,” he added.
Mascoll also accused the Government of overtaxing the country.
He said notwithstanding all that had happened over the past months, the economic issues that needed to be addressed with urgency remained: “One, the fiscal crisis. Two, the lack of economic growth, three, the galloping national debt, four, rising unemployment and five, the climbing foreign reserves.”
While acknowledging that those issues were interrelated, Mascoll said “the first order of business” for the Government was how to “reverse out of the no-entry sign”.
Mascoll said the only way out was to create growth by increasing disposable income and attracting foreign investment in order to protect the foreign reserves.