In the 2016 budgetary proposals, the Minister of Finance and Economic Affairs stated that “we must push ourselves harder to be more efficient and proficient in accommodating investors, both domestic and foreign, in getting business done in this country”. Minister Christopher Sinckler was, in effect, admitting that there was an urgent need “to drive investment, create economic opportunities, grow jobs, increase foreign exchange earnings”, and expand Barbados’ economy.
Within the next 24 hours, Barbadians will hear yet another budgetary statement from the beleaguered Democratic Labour Party (DLP). Minister Sinckler’s budgetary proposals will undoubtedly be overloaded with virtue and religious quotes, but will have lasting social and economic impact on families and businesses long after the next general election results are known. Sinckler must be pragmatic and demonstrate responsibility in the national interest instead of buckling to party paramountcy.
In late 2014, he told Barbadians that the disciplined and strategic interventions of the Government have begun to bear fruit in several parts of our economy. Almost three years later, except for tourism numbers rather than spend and financial intake, one would hardly be so bold to suggest that the fruits are visible. Still, households and businesses are facing grave uncertainty, taxation is burdensome, the declining incidence of proper services provision is rubbishing the quality of life, and the threat of further austerity measures lurk across the public service.
For the past nine years, local and foreign investments declined and job creation has been practically non-existent with wage growth lagging amidst joblessness and inflation. Sinckler, in his swan song, will surely attempt to plead a case for the DLP. However, Barbadians are worrying whether the country would be further sunk by Sinckler’s economics of austerity, and become socially pilloried by the politics of subterfuge. Will the macroeconomic policies and budgetary proposals be imprisoned by Prime Minister Freundel Stuart’s dragging out every decision that he must make with the next general elections in our foresights?
Moreover, to what extent will there be any solutions to the vexing issues that are compounded by structural deficiencies and the failed systemic policies and indiscipline of the DLP? President of the Caribbean Development Bank, Dr Warren Smith, said a few days ago that the bank’s officials were “anxious for the fiscal reforms and stabilization of the fiscal and debt situation” to be fixed before bailing Barbados. The economic concoctions put together by the DLP – first under David Thompson and now Stuart – have proven to increase the national debt (i.e. local and foreign) rather than grow the national income.
Tragically for the national economy between 2008 and 2016, Barbados recorded real growth rates at 0.4%; -4.0%; 0.3%; 0.8%; 0.3%; -0.1%; 0.2%; 0.9%; and 1. 7 % respectively. Miserably, gross government debt in the same corresponding years reflected 52.6%; 63.2%; 71.9%; 78.0%; 83.9%; 96.4%; 100.1%; 104.9%; and 107.9% as a percentage of GDP. Comparatively, these ratios are mind-boggling; while they may reflect recessionary pressures in the early stages, clearly since 2011, fiscal indiscipline combined with high debt levels and governmental incompetence guaranteed difficult times for Barbadians.
The IMF’s Article IV Consultation Report of August 2016 assessed that Barbados’ authorities “needed to put the high and growing public debt on a sustainable path, while minimizing the negative impact on growth and preserving social cohesion”. Daily, Barbadians feel the weightiness of economic inertia alongside the badly torn social fabric of society. Barbados is experiencing unprecedented gun violence; and there are mounting concerns over youth violence, specifically school boys and girls.
Recently, Shone Gibbs, President of Barbados National Council of Parent Teacher Associations reacted to a horrible incident lamenting that: “What we are seeing is not normal, what we are seeing is untenable and it must be arrested in the interest of our country.” Yet, one must ask the Prime Minister, the Minister of Finance and the Minister of Education, what programmes are they ushering in that would effectively reduce violence in our schools and arrest the prevalent deviance? The teachers and their unions have been complaining about growing violence among schoolchildren, but without resolve.
Moreover, several hush-hush decisions continue to plague the DLP, and the shenanigans create speculation and allegations of collusion and corruption. One would have thought that after the Cahill debacle, the Stuart-led Cabinet would have figured out that a large part of gaining national support for major projects such as the Hyatt, means committing to sound processes of accountability and transparency. It seems Cabinet fails to understand that although some contractors, developers and businesses have mega financial resources, it is not perceivable to the public that one or two entities continue to grab the lion’s share of everything viable, while others scrounge to eke out a daily living.
Pandering to special interests is antithetical to national development. Spurious actions of the Government or talk of trickle-down effects by those glued to classical liberalism will not bring about the widespread empowerment and prosperity for Barbadian people and businesses. Sinckler previously suggested that Government was targeting a fiscal deficit of around 3% of GDP by the end of 2014/15 and an acceleration of growth thereafter to 4% by 2020. This is 2017 and few among independent observers foresee any likelihood that Barbados would crest 2% growth this year.
The Acting Governor of the Central Bank has advised that given the decline in international reserves over the past three years, there is ‘need for further fiscal consolidation’. However, Sinckler, as he has done before, must not rely solely on ‘extraordinary transactions’ such as those undertaken in 2011 and 2012 to bump up the foreign reserves. At that time, sale of the Barbados Light and Power Company to Emera and the divestment of the Government’s shares in the Barbados National Bank boosted the declining levels of foreign exchange. Since then, Barbados has been negatively impacted by diminishing foreign reserves.
Sinckler’s optimism for the economy has floated viscerally with more promises of divestments. For example, he anticipated that the sale of the Barbados National Terminal Company Limited (BNTCL) to SOL Barbados Limited would have long been completed; he expected the proceeds would trigger a 1% of GDP in revenue inflows. The sale has not been completed nor have other major investment projects like the Hyatt got off the ground. The accompanying secrecy built uncertainty among the people, particularly with a shrinking middle class scrunching to make a dollar.
The Minister of Finance must ensure that this 2017 budget focuses on the collective good of the nation, and must resist the DLP’s thirst for a third term. He needs to put Barbados first while exercising fiscal discipline. Certainly, Barbadians are praying that Sinckler, in his swan song, brings solutions and not another suffocating sting of increased taxation and job losses. The Finance Minister needs to itemize and give details ensuring the following:
1. Immediate adjustment is done to reduce the fiscal deficit and the debt-to-GDP ratio to more acceptable levels.
2. Once again, attract local and foreign investments of the magnitude that can be means for growing the foreign reserves.
3. Continue to diversify our tourism product while paying attention to the markets, and the spend instead of only aggregate numbers.
4. Make job creation, skills training, and retooling for the labour market priorities.
5. Challenge both the public and private sectors through various economic incentives so that there can be manifested commitment to productivity, efficiency, competitiveness and excellence in the delivery of services such as health care, sanitation, public transport, and education.
(Dr George C. Brathwaite is a political consultant. Email: email@example.com)