“If we do like . . . Britain where they are now revising their own policy because they believe they went a bit too far in the first place. Or, in Greece where the pro-cyclical policies implemented have been so dramatic as to devastate the very economy of Greece to the extent that it cannot achieve any targets at all which have been set. If we do that in a small, open economy like Barbados, trust me, it is going to be for the worse,” Minister of Finance Chris Sinckler, as he compared his Government’s economic policies with those of the United Kingdom and Greece back in 2011.
Barbadians have every reason to be sick in the stomach over all we have been hearing this past week, in particular about the state of our economic affairs.
In fact, we should all be disgusted to know that we are now regarded among the lowest of the low in terms of our debt performance that has put us on par with cash-strapped economies, such as Venezuela, Mozambique and the Republic of Congo and our worsening economic woes that could lead us into default like Greece, even if our Prime Minister is simply unprepared to accept that it is so.
“We seem now to be working ourselves back into a frame of mind where once again we want to sit exams for people outside of Barbados and wait on them to grade us and if they tell us we have passed we are supposed to feel good that we have passed, and when they tell us we have failed we are supposed to hold our heads in shame and think that we are failures,” Stuart said this week, in an apparent rejection of the latest downgrade to CCC+/C by Standard & Poor’s (S&P).
It was similar to that issued by Greek prime minister Georgios Papandreou before he was forced to resign on November 11, 2011 during the Greek government debt crisis to make way for a national unity government.
Interestingly, Papandreou’s decision to step down came on the heels of S&P’s lowering of its valuation of Greece to CCC, while citing the likelihood of the country defaulting on its loans.
“The downgrade reflects our view that there is a significantly higher likelihood of one or more defaults, as defined by our criteria relating to full and timely payment, linked to efforts by official creditors to close an emerging financing gap in Greece,” the New York based ratings agency had warned Greece in issuing the downgrade, which was seen at the time as a shot across the bow to the European Union’s plans to force private holders of Greek bonds to participate in a new aid package for Greece by accepting delayed repayment.
Sadly, we are in no better a position than Greece today, neither in terms of heeding the warnings of ratings agencies nor being able to stop the precipitous economic slide.
It begs the question, after S&P’s CCC+/C downgrade and Moody’s Caa3, what next?
Will Stuart reshuffle his Cabinet as Papandreou did back in 2011, making the embattled Chris Sinckler his economic fall guy in the face of growing anger and warnings of the need for more bitter economic medicine to prevent Barbados from a disastrous default?
Indeed, despite all the recent assurances to date, given what Moody’s now said is an urgent need for a “credible fiscal consolidation programme” to be implemented, will this mean new taxes and more public sector cuts?
Back in October 2011, amid protests and violent rioting outside the parliament building, the Greek government had managed to get investors to agree a “haircut” of 50 per cent in converting their existing bonds into new loans.
But by then it was a little too late for Papandreou, who was forced to step down less than a month later amid violent anti-government protests.
Which brings us to tomorrow’s National March of Disgust. We intend to give coverage to the Opposition’s latest attempt to get the Freundel Stuart administration to sit up and listen.
But will this latest attempt to force Stuart’s hand do anything to lessen our immediate pain or help us to salvage the little that seems left of our ailing economy? We think not!
In fact, even if 20,000 people were to descend on Jubilee Gardens, The City tomorrow and were successful in forcing Government’s hand in calling an election – which is very unlikely, even if desirable at this stage — Barbados would still be at CCC, which means that there will still be a major hole from which we all have to claw back to be assured of economic safety.
Were we to follow Greece’s economic timetable, it could be another two to three years before we are again talking in terms of recovery — granted that our economic factors are not the same, even if in the eyes of the financial watchdog, Bloomberg, our latest Moody’s downgrade to Caa3 has been placed us on the same level as Greece and the Ukraine.
This is not in any way to deter the Opposition from registering its disgust. God knows that many Barbadians are simply watching and waiting for the election bell to ring so they can exhale politically!
But is Mr Stuart going to hasten the hands of his election clock, just because of what Opposition protesters have to say?
We think not!
It may be better to follow next week’s Estimates to get a better gauge of the bitter economic medicine that is to come.