In an apparent slight of Minister of Finance Chris Sinckler, outspoken Cabinet Minister Dr David Estwick said Government’s economic policies had failed and the Freundel Stuart administration was facing an uphill task in seeking to correct its errors.
And in what can be seen as an “I told you so” moment, the Minister of Agriculture, Food, Fisheries and Water Resource Management today reiterated that an alternative economic plan which he had presented to Cabinet just over three years ago, should have been accepted instead of the policies pursued under Sinckler’s supervision.
Estwick never mentioned Sinckler by name during his interview with Barbados TODAY, but it was evident that he was no fan of the policies pursued by his own Government over the past seven years or so.
The controversial minister reminded the country that as far back as 2010 the Stuart administration had been printing money – something Governor of the Central Bank of Barbados Dr Delisle Worrell recently warned must stop immediately and which Minister of Industry, International Business, Commerce and Small Business Development Donville Inniss contended was only meant to be a short-term measure.
“It is widely known that for much of our first term in Government that the Central Bank of Barbados printed money to support Government’s current expenditure, posing a real risk to declining reserves in the process,” Estwick wrote to the Prime Minister in a letter dated January 20, 2014, a position he told Barbados TODAY this afternoon he maintains to this day.
He said Government had ignored his persistent warnings that the policies and strategies it was pursuing would not work.
He broke his silence today amid growing criticisms against the ongoing printing of money to finance the Treasury, the worrying level of foreign exchange reserves and the legal battle between Sinckler and Worrell over an attempt to sack the Governor.
The minister said he had been expressing those concerns even before he began writing a series of letters to Cabinet in 2013.
Estwick had presented his alternative economic plan in the letter dated January 20, 2014.
He remained adamant today that his main proposal was the best option to restore economic growth and sustainability.
“What I will stand behind is the analysis as to why the economic policies and strategies we pursued would not have worked and why we will have to refinance and restructure the debt. This should have been done much earlier when it was easier to do. It is more difficult now because our debt metrics have deteriorated significantly since 2010,” the former Minister of Economic Affairs said.
As the ruling Democratic Labour Party today marked its ninth anniversary in office, Estwick told Barbados TODAY this country’s risk profile had also deteriorated; the arrears picture had worsened and so had the fiscal situation.
“The Central Bank continues to finance the Treasury, [while] all the while the economy realized chronic anaemic growth and foreign inflows. This is what I will stand behind,” he added.
In his January 2014 letter to Stuart, Estwick had advised the Prime Minister to change the country’s economic course.
“I am again asking you to change our present fiscal economic policy stance and fiscal consolidation programme that were outlined in the Financial Statements and Budgetary Proposals of 2011, 2012 and 2013, given that the national growth strategy is significantly off target and is not taking off in any measurable way,” he wrote.
He insisted at the time that fiscal adjustments as a strategic tool by themselves would not be sufficient to achieve public debt sustainability, given the state of Government’s public finances at the time, the related contraction in the private sector and the erosion of international investor confidence.
Estwick also continued to stand by his recommendation that the national growth strategy was compromised by the risk posed to investors by the “very” large and growing public debt and “very” large current account deficit on the fiscal balance.
“It is my contention, Prime Minister, that the normal macroeconomic tools of fiscal consolidation and an expansionary monetary policy are not nearly enough to restore fiscal and debt sustainability and investor confidence back to the Barbados economy,” he warned then, adding that the magnitude of the current account deficit was too large to be simply corrected by budget cuts and tax increases alone.
Estwick wrote then that Stuart could continue to print money to buy Treasury Bills and support Government expenditure, but this could create inflation, deplete reserves and worsen investor confidence.
He presented a second option, which was to seek to refinance the public debt, create fiscal space and introduce debt and fiscal sustainability.
However, it was his third option that Estwick thought would have been most viable, given the magnitude of macroeconomic instability in the local economy.
That option called for the administration to refinance and restructure the public debt, create debt and fiscal sustainability and engender investor confidence and foreign direct investment. He had recommended at the time that Government should negotiate a $5 billion sinking fund from the United Arab Emirates (UAE) to wipe out the country’s debt.
It was a vision supported by Pro-Vice-Chancellor of the University of the West Indies Professor Sir Hilary Beckles, who said at the time it was something the late National Hero and Prime Minister Errol Barrow would have been proud of.
Estwick told Barbados TODAY while this was the best approach, he was no longer sure if the UAE would be interested in coming to Barbados’ aid.