Government is yet to provide a clear plan for bringing the Barbados economy out of its current rut.
This was the assessment of four respected analysts today after hearing Minister of Finance Chris Sinckler’s latest press conference on the state of the economy.
Speaking on local radio, retired economist Charlie Skeete warned that the current fiscal deficit, which Sinckler reported today to be in the order of eight per cent of gross domestic product (GDP), was unsustainable.
And he called on Government to address the matter as one of urgency, given its importance to regaining the confidence of international investors.
“A six per cent of GDP fiscal deficit is not adequate,” cautioned Skeete in response to suggestions from Sinckler that the Government was aiming to reduce that figure to 5.5 per cent of GDP by the end of March.
“And I need to hear what spending will be cut, over what period to get the fiscal deficit to about a maximum of about 4.5 per cent of GDP, not because 4.5 per cent is sustainable going forward. That is the level that would restore confidence in creditors and in foreign lenders that Barbados’ programme of fiscal consolidation is on track,” Skeete added.
He also warned that rating agencies, international development banks and commercial creditors would be keen to know if a country’s foreign reserves were still in decline since this could affect the country’s ability to repay any outstanding loans.
However, while acknowledging that Barbados’ fiscal deficit was still “too high” Sinckler today sought to reassure Barbadians that there was no “doomsday” scenario facing the island, as he warned his political opponents of the danger caused in constantly suggesting so.
The Minister of Finance also assured that the Barbados dollar was not in any danger of devaluation, even in the face of a“stubborn” fiscal deficit and dwindling foreign reserves.
And in response to recent concerns raised about the state of the island’s foreign reserves, which have fallen below the 12 weeks standard cover, Sinckler said it was not the first time that such had occurred, pointing out that in 1998 the reserves fell to 9.1 weeks and in 1999 to 9.9 weeks of imports.
However, economist Jeremy Stephen, who is the current president of the Barbados Economic Society (BEC), took issue with that suggestion from Sinckler, pointing out that the country was not in a debt crisis between 1998 and 1999.
He argued that the current dire economic situation demands that a clear plan be spelt out by Sinckler for taking the economy forward.
With the Minister of Finance who is currently preparing this year’s Estimates of Revenue and Expenditure already ruling out the possibility of major retrenchment and major tax increases, he further cautioned that more would have to be done to pull the economy back from the brink than merely alluding to rationalization, which Stephen said could mean a number of things, including the retrenchment of public servants.
Today, the Opposition Barbados Labour Party also reacted to Sinckler’s latest economic pronouncements.
In a statement, the party’s candidate for Christ Church East Central Ryan Straughn contended that “Barbadians must decide how much longer they will put up with this level of incompetence and indifference from the Government”.
Straughn, a former Central Bank economist and former president of the BEC, said Barbadians expected Sinckler to address the reasons why he fired Governor of the Central Bank Dr DeLisle Worrell last week, as well as to allay fears about the printing of money and its adverse consequences on Barbadian households and businesses.
“Clearly the Government and its spokesmen are not intent on dealing with the issues of concern that have been raised by business people, economists, academics, the media and ordinary people,” added Straughn, who did not hide his disappointment with Sinckler’s presentation.
Political scientist and pollster Peter Wickham was also not impressed. In fact, he said he had heard it all from Sinckler before.
“On every occasion when the economy is in serious trouble Sinckler tells Barbadians that everything will be in shape in a matter of weeks, in a matter of days or in a matter of months. I have gotten to the stage now where I have grown tired. We are now in a situation where we have the lowest level of import cover that we have had in about ten to fifteen years. This explains why I am not impressed with Sinckler because I do not believe that he is bringing anything new to the table,” Wickham said.