Earlier this week, the Governor of the Central Bank of Barbados released the 3rd quarter report on the performance of the Barbados economy. Arising from this presentation, I believe Barbadians should ask themselves two very basic questions: firstly why does the subject of devaluation always become part of the national economic discussion whenever the Democratic Labour Party (DLP) has the reins of Government? Secondly, are the governor of the Central Bank and Minister of Finance residing in the same or a different Barbados?
Irrespective of whether you are an economist or not, or which political party you may support or whether you vote at all, this issue of devaluation always comes to the fore under DLP administrations. From my professional view point, the obvious answer to the question is that the DLP has built into its culture as an institution an acute inability to craft an appropriate economic policy that redounds to the benefit of Barbados.
A few weeks ago during a public lecture, Professor Winston Moore, Head of the Economics Department at the University of the West Indies, Cave Hill, surmised that the economy essentially does better under Barbados Labour Party (BLP) than under DLP administrations. Prof. Moore is an economist like myself and did his empirical research based on economic indicators to arrive at his conclusion.
However, ordinary Barbadians including DLP supporters openly admit that they always seem to have more money and things are a lot easier under the BLP. So Barbadians are well aware which political party manages the economy consistently better. What they don’t expect is to be lurching from crisis to crisis, particularly with respect to the stability of the Barbados dollar, every time the DLP is entrusted with the affairs of the country.
I want to make it abundantly clear. I fundamentally disagree with the notion that “maintaining the value of the currency hinges on crafting fiscal policies that aid in dampening the demand of foreign currency”, as asserted by the Central Bank governor. If Barbadians read any of the Central Bank reports, International Monetary Fund (IMF) Article IV Consultation reports or any other economic report produced domestically, regionally or internationally during the last BLP administration, they will not find any reference to the Barbados currency needing to be protected simply because the economic policy pursued was sound and the public finances were managed with prudence.
Businesses expanded and employed more Barbadians. As private citizens, we were able to improve our circumstances mainly through investments in housing. Private sector employees and public servants enjoyed the benefits of consistent salary increases due to a carefully crafted economic policy that facilitated these outcomes without ever compromising the stability of the currency peg.
These are the kinds of economic policies that allow Barbadians to improve their lot in life and move out of poverty. They are diabolically opposed to those of the current DLP government that have resulted in more and more people falling back into poverty.
I asked earlier in which Barbados our policy makers live. It is a fundamental question because macroeconomic indicators should bear some semblance to the reality and experience of the man and woman in the street. The Central Bank’s report suggested that prices are declining in Barbados which mean that things should be getting cheaper for consumers. This could not be more out of touch with the experiences of average Barbadians.
Anyone who had to outfit children for back to school during the summer would laugh and stupse at such a statement. Since September 1, 2015, the number of items which were zero rated for VAT purposes since 1997 under the BLP has been significantly reduced and the prices of those items have been increased by 17.5 per cent at least.
The price of basic food items such as rice, potatoes, soya bean oil, corn, golden apples, coconuts, rice, potatoes, flying fish, mackerel, spinach and minced meat have been increased by 17.5 per cent for a whole year now. Yet the Central Bank is saying that prices in Barbados have fallen.
This is a clear demonstration that our policy makers are so out of touch that they apparently don’t even know how their own policies have affected the lives of ordinary Barbadians across the length and breadth of this country. This is not surprising after all.
Cabinet Ministers, led by the Prime Minister, have agreed to increase their salaries by 10 per cent – putting back on the amount they took off when the fiscal stabilization programme was introduced. I can only conclude since they have more money in their pockets to spend that they think the cost of living in Barbados must have gone down.
Doing commentary on the Central Bank’s reports has become an exercise in futility. When one examines the trends associated with any of the economic indicators that have been targeted for adjustment by the Minister of Finance, all of them have deteriorated significantly. What makes matters worse is that ordinary Barbadians are now more vulnerable than they were before.
Barbados used to pride itself on having good water quality; now people are reportedly getting sick from water in this country, based on media reports. If this continues, a serious public health issue could arise which would put further pressure on the already stretched health system.
Basic sanitation along with a host of other public services have been compromised with the average citizen feeling the burden. Barbados deserves better at the macro level but more importantly we have to ensure that we absolutely get it right at the level of the citizen.
We cannot continue to probe in the dark while our policy makers continue to demonstrate the significant degree to which they are out of touch with the experience of the average Barbadian.
(Ryan Straughn is a UWI Cave Hill and Central Bank of Barbados trained economist and the endorsed Barbados Labour Party (BLP) candidate to contest the Christ Church East Central seat at the next general election. Email: email@example.com)