Barbados is an import-driven country, with the level of exports insufficient to create a surplus in the current account.
Parliamentary Secretary in the Ministry of Finance Senator Jeptor Ince gave this explanation today in the Senate while defending Government’s decision to raise the level of Government borrowing on financial markets to $4 billion.
The Government senator said: “As a result of being import-driven, it is critical that we finance a deficit, because we are going to have deficits. In good economic times, you will expect the deficit to be a lot smaller . . . . In challenging economic times there will be a high deficit because it is a reality. It is not perception. It is not vodoo economics.
“What this administration is seeking to do is to ensure that we protect the foreign reserves in these challenging economic times. I am saying in simple language that if this country does not protect its foreign reserves that are critical then we are going to the International Monetary Fund.
“There are some who would like to say that simply borrowing funds indicates that Government does not know what it is doing. In good economic times, when we had growth we still carried deficits.
“When we look from 2000 coming forward we still had deficits and all of those deficits were financed through two means, either domestic market or international market. It should be recognized that there is no significant shift in the local economy.
“We depended on tourism; we depended on foreign investment; we depended on capital inflows and we depened on remittances. Through all of this time, we stood by and watch the manufacturing sector crumble. The voices that I heard then are the same voices that I hear now.
“We did not effect a paradigm shift. Our agricultural sector went into the doldrums and we never did anything,” Ince added.
Ince gave Barbadians the assurance that Government will reduce the deficit gradually.
“We can reduce the deficit with one stroke of the pen. It can be done. A deficit can be reduced almost overnight.
“All you have to do is decide that you are going to cut your interest payments on loans; cut your critical services by 50 per cent; you are going to cut your wages and salaries by another 50 to 60 per cent and you will bring your deficit down, but at what cost? The destruction of the people of Barbados and the economy. The Democratic Labour Party is not about that,” Ince explained.