With the intervention of Crop Over, immediately followed by CARIFESTA XIII and now the horrible tragedy which has befallen Dominica and our other Caribbean neighbours following the passage of Hurricanes Irma and Maria, our national attention seems to have shifted somewhat from focusing on the deep crisis in our own backyard – namely, the crisis in our economy.
Since the nationally televised meeting of the Social Partners in early August, which coincided with the release of the 2017 second quarter review of economic performance by the Central Bank, the critical issues related to the economy that need to be fixed as a matter of urgency, somehow seem as if they have been temporarily placed on the back burner.
Given the immense pressure and criticism which the Freundel Stuart administration has been facing over its management of the economy, the intervening distractions, if we may use such a description, understandably provide a welcome respite. However, though it appears that the various problems may have receded into the background for the time being as new issues have come to the fore, such as the hurricane relief efforts, it does not mean they no longer exist or require urgent solution.
Minister of Finance Chris Sinckler has been noticeably quiet, except for his controversial remarks after the devastation of Dominica by Maria when he suggested that we have to pay our taxes as Barbadians because if a hurricane were to strike us, it is unlikely that Barbados would receive a generous outpouring of aid because of the fact that we are now categorized by international financial agencies as a relatively prosperous middle income country.
At last month’s meeting of the Social Partnership, Government committed to carrying out a review of the ten per cent National Social Responsibility Levy at the end of this month — five days away — to determine the impact of this revenue-raising measure which was raised in the May 30 Budget presentation by 400 per cent. Hopefully, coinciding with the release of the findings of the review which should not be unduly delayed, a comprehensive update will also be provided on the economy. Barbadians are particularly keen on finding out if any success has been achieved in stemming the decline of the foreign reserves and if major progress has been achieved on bringing down the fiscal deficit in line with stated targets.
Late last week, leading regional economist Marla Dukharan warned Barbadians to brace for more hardships given the likelihood that Government will miss its fiscal targets and that the island’s overall economic performance will be weaker than expected this year. She issued the grim assessment in response to the latest country risk report prepared on Barbados by the United States-based global insurance credit ratings and information services firm A.M. Best.
The report, which was issued last month, suggested that the country was now at tier four (CRT-4) in terms of its level of economic and financial risk. The report also highlighted several challenges, including Government’s high debt burden, the country’s growing challenge to maintain its currency peg to the US dollar, its high dependency on tourism, low foreign reserves, as well as the Central Bank’s continued financing of Government. Dukharan, who is the chief economist at the Barbados-based financial technology company Bitt.com, stressed those areas required urgent attention.
However, with a general election approaching and due at the latest by the second half of next year, it is debatable whether these issues will receive the level of required attention seeing that the political directorate which is responsible for making key policy decisions, will soon be heavily focused on waging an election campaign where their own survival is at stake. In a sense, the coming election may serve as another distraction. It would be unfortunate if as a result, critical economic issues are placed on the back-burner to await the attention of whoever forms the next government.
The question is whether the economy can now endure any more lengthy delays without experiencing more serious deterioration. Fixing the economy, as we see it, amounts very much to a matter of life or death for Barbados. Figuratively speaking, economic collapse can have the effect of creating a wasteland almost akin to the impact of a major hurricane. It is a fate which we must do everything in our power to avoid.