I am prepared to wager a bet that the recently concluded Budgetary Proposals and Financial Statement represent only the prelude to a work which will be reviewed in six months’ time and completed some three months thereafter – that is, the Election Budget.
Notwithstanding the many meetings with the various interest groups, it is my unswerving belief that Minister of Finance Chris Sinckler is debilitated from downgrades and negative comments originating from the rating agencies and the International Monetary Fund (IMF) respectively, hence the reason for crafting such a Budget.
In other words, both the rating agencies and the IMF will be accepting the measures and see them as redemptive of his economic style and performance of the country to date.
I shall go even further and say there will be no further downgrades for the rest of this administration’s parliamentary life.
The Budget is predicated upon austerity, which will ultimately lead to hardship and more falling through the cracks.
The economics gurus have spoken, the analysts and pundits have declared, even the talk show hosts, and I cannot add but one cubic more to their opinions.
What I do know is, there is an IMF formula for debt and deficit ridden jurisdictions like Barbados, who want to stymie the prevailing condition with an improved prognosis.
I learnt of this curative formula from Madame Christine Lagarde during an interview when she first assumed her role as Director of the IMF.
There are seven prescriptions:
i) Reduce the debt to a sustainable level
ii) Bring the deficit down to within two to three per cent of GDP
iii) Achieve Balance of Payments so as to maintain stability of your currency
iv) Hold unemployment below double digits
v) Contain the rate of inflation
vi) Reduce interest payments meaningfully
vii) Grow the economy to about three per cent per annum for three years
The Minister has set about addressing i), ii) and iii), albeit in a severely austere manner.
The proposed sale of the Barbados National Terminal Company Limited (BNTCL) and Government’s shareholding in the Hilton could be seen as achieving two things in one fell swoop: ridding the economy of unnecessary expenditure; and topping up the foreign reserves.
Minister Sinckler revealed that unemployment was in single digits up to March.
With oil prices remaining relatively low, the rate of inflation would follow suit.
That the economy has grown, albeit anemic, cannot be gainsaid.
In respect of debt repayment to the National Insurance Scheme (NIS) and the Central Bank, some sort of restructuring and rescheduling will be achieved, haircut or otherwise.
Concomitantly, Mr Sinckler has pleased those who believe that our currency is overvalued, by way of a double whammy with the two per cent charge on foreign currency purchases, as well as the eight percentage point leap in the National Social Responsibility Levy (NSRL).
You know what? Mr Sinckler has self-prescribed using the same seven prescriptions as found in the IMF for states experiencing the malady which Barbados is currently suffering.
There is a rule of thumb which physicians follow daily and routinely when prescribing – that is, where the advantages outweigh the disadvantages, then proceed.
I am not sure that this reasoning holds for Mr Sinckler’s patient. But he can and will argue that he will only know when he sees the patient at the six months check-up.
If per chance the patient shows signs of improvement at that time, then he can start weaning the patient off for the next three to four months, at which time he may argue that the patient can start treadmill and endurance exercises, much to the delight of the IMF and rating agencies.
With most of the vitals intact, then only maintenance therapy would be required.
Hey, Chris, this is a big risk. “You rissin,” as the youngsters would say. But then again, everybody “rising” these days.
I trust it’s not too much too late.