Minister of Finance Chris Sinckler today politely rejected former Prime Minister Owen Arthur’s offer of “free” economic advice, while suggesting if the economy was in “intensive care”, it was the former Prime Minister who was responsible for putting it there.
Also responding to Arthur’s suggestion that Government needed to take urgent action to lower its spiralling debt, Sinckler told Parliament that the ruling Democratic Labour Party(DLP) administration, which came to Government in 2008, had inherited much of its current debt burden from the former Arthur administration, which led the country for over 14 years.
However, Sinckler, who had only recently approached Arthur for the post of Government’s lead economic advisor to replace the retiring Sir Frank Alleyne, did not dismiss the former prime minister out of hand, even though he suggested “there is a lot of intellectual dishonesty that goes on in Barbados”.
Sinckler told Parliament that the BLP under Arthur’s leadership was living in “seventh heaven” when it came to public financial accounting, while claiming that it had been able to conceal a significant amount of expenditures under the cash based accounting system which allowed for “below the line accounts”, such as the Public Enterprise Fund.
He went on to detail millions of dollars in public spending, which he said did not have to be shown on any account.
“Two hundred and seventy five million dollars for GEMS [hotel project], millions of dollars to help build the Hilton [hotel] . . . 150 million dollars was borrowed to build the Judicial Centre. None of that had to be shown on any fiscal account,” said Sinckler.
“But you know when they created all that debt and left the system using the cash basis of accounting system, the Democratic Labour Party came into office and had to use the accrual basis of accounting system and we had to bring all [debt] of it onto the books and there goes the fiscal position,” he added.
Sinckler further charged that the BLP had racked up even more debt through large blocks of statutory transfers, including the transformation of the state-run Queen Elizabeth Hospital from a Government department to a statutory body at the cost of $100 million and for the creation of the Grantley Adams International Airport Inc, a private company which manages the island’s airport.
“So when you set up a system that other people have to be affected by . . . and then you come back after and lecturing people about how fiscally irresponsible they are, it is unfortunate because it does not tell the true story of what I, as Minister of Finance, and this Government have had to deal with.”
Sinckler also chided the former leader for accusing the island’s Central Bank of engaging in “acts of vandalism”.
He told Arthur: “Stop abusing the Central Bank,” as he defended its printing of money, which Arthur said was putting the entire economy in peril.
“In every major country that has been impacted upon by the global recession, all of them, all of their central monetary authorities printed money and are supporting their government in the most difficult circumstances – the European Central Bank, the United States Federal Reserve and you know what they call it over there? They call it quantitative easing, and it is encouraged by the same IMF [International Monetary Fund] that come down here to lecture about the Central Bank supporting its own Government,” said Sinckler.
He went on to debunk the notion that it was only under the BLP that Barbados enjoyed high foreign reserves, charging that the country has always had to go to the markets to borrow to shore these reserves.
“In the space of five years from 2000 to 2005, Mr Speaker Sir, the last Government borrowed 515 million in five years . . .and this was in the place when we were doing well. When everything was good.”
In response to Arthur’s warning that state enterprises would have to be cut, Sinckler said Government was aiming to bring down the country’s fiscal deficit by as much as three per cent and it would continue efforts to reform key statutory corporations, including the Ministry of Transport and the Sanitation Authority in a responsible way.
“We will be fiscally prudent, we will do the reforms, but we are going to do them in a humanistic way.”
He promised to report by mid-year on whether the country was on track with its target. (SD)