Economist Ryan Straughn says the latest Central Bank report is not only a clear indication that Government’s fiscal adjustment programme is not working, but also that the bank itself has lost touch with reality.
“All of the key indicators that are supposed to be up are down, and the ones that are supposed to be down are up,” said Straughn, who in addition to being a past president of the Barbados Economic Society and former central banker, is also a political candidate for the Opposition Barbados Labour Party (BLP).
“Given the number of adjustments that we have had, it is sad that this is almost an exercise in futility because it is clear that none of the adjustments that have been introduced are working,” he emphasized.
In his report yesterday, Governor of the Central Bank Dr DeLisle Worrell revealed that the financial institution continued to print money to finance Government to the tune of $114 million for the first nine months of this year.
“The gross public sector debt at the end of September stood at 108 per cent of GDP, while the net public sector debt ratio was 57 per cent,” Worrell added, while reporting a small reduction in grants to state-owned enterprises and in wages and salaries, but an undesirable increase in interest payments because of the rising debt levels.
“So in other words, the Government keeps spending and the Central Bank keeps printing the money to facilitate them, and so the interest component keeps going up. And once that happens then obviously that is less money you have available to send to the statutory corporations,” Straughn said.
No wonder, he said, Government was experiencing difficulty in financing the Sanitation Services Authority, the Transport Board and the Barbados Water Authority.
“These are three critical public services, in addition to education and the hospital and everything else that requires transfers from Government in the current structure. It means you have less money to do these things and that stems directly from Government’s policy.
“Whatever you do at the macro level have to redound to the benefit of ordinary Barbadians and that is simply not happening,” he added.
Stating that he found it difficult to identify where economic growth would come from, Straughn said the current trend of a growing debt was enough cause for serious concern.
Also questioning the lack of information in the report on some sectors, Straughn, whose Abelian Consulting Services Inc also carries out national economic surveys, painted a different picture of the current situation on the ground.
“If you take for example, the measurement for inflation which is suggesting that price levels are down when compared to last year, I think if you ask any ordinary housewife or anybody who went into town to do their back-to-school shopping . . . then I think they would laugh at you. The fact that they are suggesting that inflation is negative overall in the economy demonstrates how far from reality they [Central Bank] are living in Spry Street and that is something that is clearly of concern because they are the ones driving not just the printing of money, but driving the fiscal policy of the Government as well.
“Therefore if they are detached from reality then it means that we who obviously would experience the effects of their policies would be made that much worse,” Straughn emphasized.
The BLP Christ Church East Central candidate also pointed to a potential slump in business and investor confidence, saying he did not believe Barbadians and international agencies and partners were satisfied with the level of reporting by the Central Bank on the economy.
“So the level of reporting leaves quite a lot to be desired if we are focusing more on producing nice high quality video productions rather than focusing on the content so that ordinary Barbadians can feel confident in the credibility of the institution,” Straughn stressed.