The Opposition Barbados Labour Party (BLP) believes the report released yesterday by the Central Bank of Barbados (CCB) did not paint a pretty picture of the state of the country’s economy.
Despite the CCB’s announcement of 1.3 per cent growth in the first half of this year compared to 0.5 per cent during the corresponding period last year, the BLP today pointed to a number of worrying trends.
“There are three simple facts that ought to stand out in the minds of Barbadians from the Central Bank’s economic release for the first half of 2016. The fiscal deficit of the Government has increased; the Central Bank continues to print money to finance Government’s expenditure; [and] the foreign exchange market has deteriorated as evidenced by the fall in net international reserves,” economist and BLP Christ Church East Central candidate Ryan Straughn said in a statement.
“The net effect of this report is that ordinary Barbadians who run their households and businesses can take little comfort from its contents that progress has been made after enduring 31 months of the Freundel Stuart administration’s home grown fiscal stabilization and economic revitalization programme. The success of the fiscal consolidation programme has been well trumpeted by the Minister of Finance and other members of the Governments during the debate on the Estimates of Revenue and Expenditure for 2016/2017,” Straughn added.
The Opposition politician made reference to Moody’s downgrade of the economy in April this year, which the ratings agency said at the time was based on slow progress towards achieving fiscal consolidation consistent with a sustainable debt trajectory and low level of foreign exchange reserves and weak funding conditions.
Straughn linked the downgrade to Moody’s “estimate of the fiscal deficit of 5.5 per cent” of Gross Domestic Product (GDP) for the fiscal year 2015/2016.
He said yesterday’s report revealed that the situation was even worse then the ratings agency had predicted.
“This latest Central Bank report now indicates that the ‘true’ fiscal deficit was in fact approximately 7.4 per cent of GDP, almost two per cent worse that initially estimated by Moody’s. On top of this realization the report also says that the Government has increased its deficit for the first quarter of this fiscal year 2016/2017. So much for the success of the fiscal consolidation exercise imposed on Barbadians previously,” he said.
“The fact that the Governor of the Central Bank has deliberately used Moody’s estimate of the fiscal deficit on which to base Barbados’ economic outlook and not its own estimate is simply remarkable and calls into question the credibility of the whole exercise.”
The BLP maintained it had no confidence in Prime Minister Freundel Stuart, Minister of Finance Chris Sinckler and Worrell “when it comes to the management of Barbados’ economic and financial affairs”.
The questioned the rationale behind the fiscal consolidation programme when Government “was going to continue its reckless spending programmes”.
“The announcement by the Governor that foreign exchange outflows will be tightened by measures to be announced in the forthcoming budget has already sent off alarm bells across the Barbadian landscape.
“Citizens have openly questioned the results of the latest labour force survey and having read this Central Bank report will have even more questions that certainly demand serious answers,” he added.