Recent assertions by Minister of Finance Chris Sinckler that the dollar was not in danger of devaluation, the economy was growing and the country would be getting some favourable economic news shortly, are not enough to quell the concerns of the private sector.
President of the Barbados Chamber of Commerce and Industry (BCCI) Eddy Abed told Barbados TODAY while he would welcome any positive news on the economy, there were still worrying concerns in the private sector about the foreign exchange levels and Government’s high debt.
“Any positive economic data from a reputable source would be welcomed by the private sector of our country. However, our concerns about foreign exchange levels and Government deficit remain worrisome.
“Unless Government can demonstrate that they have cut their expenditure in a sustainable manner so that our deficit as a percentage of GDP [gross domestic product] is no more than our growth rate, the news will not be enough to restore confidence immediately,” Abed said.
Additionally, the business executive said BCCI members were eager to see what the public purse looks like at the end of the financial year on March 31.
“The BCCI would want to see the economic data at the end of Government’s financial year to confirm that the economic data is consistent and more importantly, the international rating agencies concur,” he said.
Sinckler on Tuesday had made it clear there was no way the ruling Democratic Labour Party (DLP) would devalue the local currency, stating he would rather resign first.
And with the Barbados Labour Party (BLP) suggesting that the economic situation was so dire that the DLP-led administration would be turning to the International Monetary Fund (IMF) for a bailout programme, Sinckler said that was not the case.
He suggested that contrary to Opposition rhetoric, the economy was growing, revealing that a report compiled by his ministry with support from the IMF had found that the situation was not as dire at BLP was portraying.
“We are very shortly going to issue that GDP series to tell people what the real size of the economy is and how it has risen by size over the last ten years and it is going to shock a lot of people,” Sinckler had said in his contribution to debate on the Banks’ Tax on Assets 2017 Bill.
He had also said the Governor of the Central Bank of Barbados Dr Delisle Worrell would present his latest report next Tuesday, following which Prime Minister Freundel Stuart would address the BCCI on the economy.
However, Sinckler’s comments are also not sitting well with economist Jeremy Stephen, who has suggested that his threat to resign if there is a devaluation could be interpreted in two ways – either that the Minister of Finance was willing to make the tough calls at the expense of his political career, or that he was bracing for the inevitable and was intent on delaying the hard economic decisions.
With general elections due here by next year, the President of the Barbados Economic Society (BES) said it remains to be seen which of the two scenarios would become a reality.
“It’s tough being an economist and I am sure the Minister of Finance has . . . a lot of tough decisions to make. I really think that this is what drove him to say the most outlandish thing,” Stephen said.
He said while it was usual to respond with admiration for someone “willing to put his neck on the line for the country”, in Sinckler’s case he had been left to wonder what else was at play.
“Let’s say you knew that the dollar was going to be devalued, you could as a Minister of Finance say that I am willing to resign if it happens. However, chances are if you believe that you may lose [at the next general elections] then you could afford to say that [and] then pass the buck on to someone else, let them deal with that [since] they are the ones who would be responsible for devaluing the currency,” Stephen opined.
Nevertheless, the BES head said he was hoping for the sake of the country’s economic future Sinckler was prepared to do the necessary expenditure cuts.
“Being a professional, I hope that what he said was genuine and I know most of us have heard him say one thing and do the next, but I have always said that the Minister of Finance has said some things that have come to pass. I am not sure if this is one of those statements because I think it was a gimmick.
“Maybe it is going to come to pass or maybe he is going to cut the expenditure but you are only going cut the expenditure if you are also willing to lose.
“Do we believe that the Democratic Labour Party is willing to put their necks on the line and risk losing the next election? However, if they do, they would probably win the admiration of generations to come,” he added.
Governor of the Central Bank of Barbados, Dr Delisle Worrell, in his January 2017 economic newsletter, admitted that Barbados had repeatedly failed to achieve the balance between its foreign exchange outflows and inflows necessary for a stable economy. He therefore called for further restrictions on public spending in order to protect the country’s foreign exchange reserves, while cautioning “the reserves are what protect us against the devaluation of our currency”.
And though suggesting the island’s future was still exceptionally promising, the Governor further warned that “it will not happen unless we make it happen, and like all worthwhile objectives, realizing the vision will not be painless”.