The week-long debate on Government’s 2017-2018 Estimates of Revenue and Expenditure is taking place in the House of Assembly with a higher than usual level of public interest, given recent worrying signs of deterioration in some critical areas of the economy, despite an encouraging resumption of growth last year following eight years of general decline.
With the island receiving its 19th credit rating downgrade since 2008 last Friday, major concern that not enough was done to address the huge fiscal deficit, and new worries about a recent slide in the foreign reserves that has raised questions about the current exchange rate of the Barbados dollar, Barbadians are obviously looking to this debate for a clear and appropriate policy response to the problems.
Indeed, coming months before Barbadians go to the polls in a general election, this Estimates debate represents a crucial political test for the Freundel Stuart administration and the ruling Democratic Labour Party (DLP). The DLP took office on a wave of public goodwill back in 2008, but has subsequently seen its fortunes plummet, especially following the death of former Prime Minister David Thompson, primarily because of the weak performance of the economy under its watch.
Leading off the debate yesterday, Minister of Finance and Economic Affairs Chris Sinckler said reducing the fiscal deficit from 5.1 to 4.4 per cent of Gross Domestic Product — the total value of goods and services the island produces in one year — was a major objective to be pursued during the 2017-2018 financial year in order to reduce Government’s current heavy reliance on Central Bank financing, otherwise known as the printing of money which has been a highly controversial issue.
“We still think that 4.4 [per cent] is too high. We need to bring it down further . . . but we need to do it in a responsible way that does not unravel the entire society and we are going to be meeting with all groups in the society and interested persons and work it out how we can get to the stage of phasing out Central Bank lending,” said Mr Sinckler as he defended Government for safeguarding the interests of “ordinary citizens” by not tackling the issue on the scale some would have liked.
Deficit reduction almost always requires some sacrifice from the population, as happened following the 2013 general election when Mr Sinckler significantly raised taxes in what, it is clear now, was an unsuccessful pursuit of the same objective under the 19-month home-grown adjustment programme. Barbadians, who feel they have already sacrificed and are already up to their necks in taxes, naturally now wait with bated breath to see what measures will be introduced and how specifically they will be impacted in keeping with Mr Sinckler’s promise of “a responsible way”.
The answers will come during Mr Sinckler’s presentation of the Financial Statement and Budgetary Proposals which usually follows the Estimates. Seeing that these measures will be introduced during the run-up to a general election which Prime Minister Freundel Stuart recently indicated the DLP was determined to win, attention will be focused on how Government, which is walking a financial tight rope, will seek to avoid further infuriating voters which would be costly at the polls.
What was particularly interesting, though, about Mr Sinckler’s presentation, was the recognition, even at this eleventh hour, of the need to engage the population in a national conversation on the economy. It is unfortunate that the importance of such dialogue was seemingly not recognized earlier because had this route been taken, Government might have succeeded in winning vital public buy-in and the 19-month adjustment programme, which missed quite a few targets, might have achieved the kind of success which would have eliminated the current need for fresh intervention. Opposition Leader Mia Mottley, buoyed no doubt by the response to last Saturday’s Barbados Labour Party-organized March of Disgust through Bridgetown against the DLP Government, gave Mr Sinckler’s effort in relation to the Estimates a failing grade.
“The only option left is to give the people of this country the right to decide and determine their fate at this point,” she said, contending that any action taken now on the economy should be short-term.
A major failing of this DLP administration, to which we have repeatedly drawn attention, has been an inability to effectively communicate with the aim of winning public support for its policies and programmes. Success is always the outcome of effective communication while ineffective communication breeds failure. The DLP, therefore, can only blame itself for the situation today where there is considerable public misunderstanding of what it was trying to achieve.
An interesting period clearly lies ahead. Meantime, the battle lines for the forthcoming general election are already drawn.