Now that we are on the brink of economic ruin, there is no need for anyone to pretend that our situation is anything but dire. Many financial professionals and business persons are now openly stating, that the Government of Barbados, lacks the discipline to properly manage our economy. They are also openly recommending that we need to be under the financial discipline of the International Monetary Fund (IMF).
The reason for such lack of confidence in our politicians ability to manage Barbados’ economy is clear. We have been brought to where Jamaica and Guyana were just before their currencies were devalued – out of all good options. The rating agencies do not think that we can repay what we have borrowed. So they have already warned all international banks and investors that lending to Barbados is extremely risky. That is what all of those downgrades were about.
We should be under no illusions that it is just the current administration that lacks the discipline to manage our economy. Moody’s 2009 downgrade report under the current administration blamed the downgrade mostly on the last two terms of the BLP administration. Let me quote from the report. “Barbados’ key debt indicators have been on a deteriorating path over the past decade”, that would be 1999 to 2009.
All of the other political parties plan to refinance the debt, which is just another way of saying that they plan to go to the IMF. When we go to the IMF with a debt of over 150 per cent GDP, you do not go to negotiate anything – you go to take your medicine.
We need to be reminded that the IMF has one main role – to protect the country’s foreign currency earnings from the country’s residents. They are well-aware that if you have access to foreign currency, you will spend it. They are there to ensure that the foreign currency is used primarily to repay those from whom we borrowed, and now cannot afford to repay.
The IMF has two main methods that they use to prevent us from using foreign currency on our needs or wants. The first is to devalue our currency, to make the foreign currency purchases very expensive for us. The second is to increase income tax and sales tax rates, so that our families will have very little money to purchase foreign currency, after paying for normal monthly expenses.
So we will be on a cycle of increased taxes and devaluation until the taxes cannot be increased any further without riots, and then they will keep devaluing the local currency until the residents simply cannot afford to purchase the foreign currency. Our Guyanese neighbours now need 200 of their dollars to purchase 1 US$. Our Jamaican neighbours need about 120 of theirs to purchase 1 US$.
It is useful to be reminded of Guyana’s experience with the IMF. Within one year of the Guyanese people being surrendered to the IMF, Guyana had fallen from being one of the richest Caribbean countries to one of the poorest. Guyana experienced: a 70 per cent devaluation of their dollar, doubling of income tax rates, a lack of supplies and maintenance parts, and 75 per cent of the population in poverty – all within the first year.
So, after bringing us to the edge of the cliff of economic ruin, they now want to push us off. They promise us that if they are elected, then we must take their bitter medicine and their harsh austerity. They blame us for living above our means, when it is they who have borrowed above our ability to pay. Why do we have to pay for their gross mismanagement? People of Barbados, we do not.
About three years ago, we published our economic and social plans for the public to examine, criticise and improve, on Solutions Barbados.com. It was our manifesto. It has been independently verified to turn the economy around where we run a surplus in our first without austerity.
To put this in context. Barbados has only run a surplus once since our independence. No political party should be forcing us to accept an unnecessary austerity when we have a workable non-austerity plan on the table. It is unconscionable.
(Grenville Phillips II is the president of Walbrent College who has trained over 1,000 late-learners across the Caribbean region. He is also the founder of Solutions Barbados and can be reached atNextParty246@gmail.com)