Last Wednesday night, as the House of Assembly was in the final stages of debate on the 2015-2016 Financial Statement And Budgetary Proposals, former Prime Minister Owen Arthur delivered an insightful analysis of the current state of the Barbados economy.
Devoid of the highfalutin jargon that often characterizes discussion of economic issues, and convincing in its argument for a better formula to place Barbados firmly back on a sustainable growth path, the 30-minute presentation is required viewing or listening for any layperson seeking to gain a better understanding of the major challenges Barbados faces.
Mr Arthur’s presentation focused on two major issues: the imperative of achieving sustainable growth to support a continued high standard of living for Barbadians, and the urgent need for Government to address the record high level of public debt that is placing a severe strain on the country and adversely affecting its development prospects. Mr Arthur spoke, not in the partisan language of the typical politician looking to score points, but as an elder statesman befitting his status both as a former Prime Minister, Minister of Finance and now Independent Member of Parliament following his resignation from the Barbados Labour Party (BLP) just over a year ago.
Say what you wish about Mr Arthur, the politician, in his heyday, the reality is that even his harshest critics readily agree that when he speaks on economic matters, his word carries considerable weight. It’s not only because of his extensive training and experience as a professional economist, but also his successful track record managing the economy during a high-performance period to the benefit of Barbadians.
It is for this reason that many Barbadians hope the embattled Freundel Stuart administration, whose economic management credentials have been repeatedly questioned by a wide cross section of the citizenry, would take the red flag which Mr Arthur has raised about the economy seriously. Mr Arthur is making a case for Barbados to seek debt refinancing which, he contends, is indispensable if the emerging economic recovery is to gain momentum.
With Government facing an unprecedented challenge where 60 cents out of every dollar of revenue now goes towards servicing the debt which, in March, was estimated at the dangerously high level of 135 per cent of gross domestic product (GDP), he contends the economy will not have the breathing space it needs to achieve sustainable growth with refinancing the debt. As proof such a move does make a difference, he points to the dramatic turnaround of Guyana which, after decades in the doldrums, is now the fastest growing CARICOM economy.
He also refers to Jamaica and St Kitts as other CARICOM countries that have opted to go this route to deal with their debt.
“There is no disgrace in dealing with the debt,” he told the Freundel Stuart administration.
It was heartening to hear the Prime Minister, who spoke after Mr Arthur, acknowledging the gravity of the debt problem and saying: “We have to take it seriously, and we have to wrestle that challenge to the ground.”
Mr Arthur contends his other major concern –– the $200 million in new taxation which was imposed in the Budget –– represents a setback for the emerging recovery, since it is more likely to cause the economy to re-enter contraction.
“When a country is coming back out of recession, the one thing that is expected of a Minister of Finance is a confidence-boosting measure that points the way to a better future,” he said, reflecting on his own experience in 1994 when Barbados was in a similar situation.
Politically speaking, taking advice from Mr Arthur may be a harsh pill for the ruling Democratic Labour Party (DLP) to swallow, even though there is no doubt that he has Barbados’ best interests at heart. However, the fact that other CARICOM countries recognize there is great value in what he has to offer and are seeking out his advice to support successful transformation of their economies, is all the more reason why Barbados should heed his advice. It calls for a display of maturity that allows politics to be put aside in the national interest.