In his latest monthly newsletter examining developments related to the Barbados economy, former Governor of Central Bank, Dr DeLisle Worrell, described the outlook for 2018 as “dire”.
Though such a forecast does not come as a complete surprise, given the continuing challenges facing the economy which has been in a protracted tailspin since 2008, it is still not the kind of news most recession-weary Barbadians would wish to hear at the start of the new year when hopes usually abound of changes to personal circumstances for the better.
Dr Worrell, whose controversial tenure as Central Bank Governor came to an abrupt end almost a year ago when he was fired by Minister of Finance Chris Sinckler halfway into his second term as one of the Democratic Labour Party (DLP) Government’s top economic advisers, based the forecast on the implications of the following factors that set the stage for economic performance over the coming year:
“Foreign reserves reported by the Central Bank were only $550 million in September, with over $100 million in foreign debt and interest payments due in the final quarter. The NSRL [National Social Responsibility Levy] and foreign exchange fee have fallen short of expectations, and Government continues to spend more than it receives in taxes.
“The new taxes [introduced in last year’s Budget] are driving the economy into recession, and the declining reserves have undermined investor confidence. The country’s low credit rating means that it has no access to foreign market borrowing, and maturing debt has to be repaid in full.”
Drawing attention to a seven-point plan he was putting forward to effect a turn-around and set the island back on a path to prosperity over five years with the financial support of key multilateral lending institutions, Dr Worrell posited that “even at this late date, an alternative future is attainable” but it required “firm, decisive and urgent action” by Government.
However, it is unlikely that any such as response will be forthcoming with a pending general election. When Barbados goes into election mode which traditionally occurs about six months before the actual date of the poll is announced, major decision-making in almost every sector usually comes to a virtual standstill.
Just about everyone, from the party in Government to the business community to the average citizen, tends to adopt a wait-and-see approach as to how things will eventually pan out before taking the plunge, especially with regard to making important decisions that involve some measure of risk-taking.
For sure, no ruling party, especially if it has suffered an erosion of popularity, is going to be inclined to take measures that will further alienate voters and jeopardize its chances. As being in Government is preferred to being in Opposition, incumbents attempt to do everything that help to cultivate a “feel-good” factor among voters to boost their electability.
Taking these political considerations into account, it means the decisive and urgent action on the economy which not only Dr Worrell but other stakeholders, including the private sector, would wish to see, will most likely have to wait until after the election which can come as late as the second quarter, if Prime Minister Freundel Stuart so chooses in exercise of his constitutional right.
A four-month delay, however, may be a bit too much for the economy. It could deteriorate further and end up in worse shape which would not be in the national interest. As time is clearly of the essence, it seems, therefore, that the best thing to do is to get the election out of the way as soon as possible so that the country can settle down and focus fully on seriously fixing the economic problem.
From our assessment of the national mood over the past few months, it seems that Barbadians are quite eager to exercise their franchise. Indeed, it is likely that most have already made up their minds, one way or another. In this particular instance, national considerations should take precedence over political considerations.