Since the 2018 general elections, many persons have blamed the last Democratic Labour Party government for the predicament the country finds itself in, with some describing 2008-2018 as “the lost decade”. My aim in this article is to put Barbados’s economic situation into proper perspective.
Until the 1960s, sugar dominated economic activity in Barbados. After Independence, there was a shift away from that industry towards tourism and light manufacturing with International Business becoming important in the late 1970s. When manufacturing suffered a dramatic decline in the last two decades of the twentieth century and little attention was paid to agriculture, our country became almost totally dependent on tourism and the financial services sector, both of which are highly dependent on the fortunes and mood of source markets. In short, for more than thirty years, we have been placing our economic eggs in insecure baskets.
To help finance the most comprehensive set of social services in the Caribbean and infrastructural development, successive governments have borrowed locally and from external creditors at levels which were bound to land us in trouble, eventually. In addition, low productivity, corruption, inefficiency and negligence in the collection of taxes and other imposts have led to a situation where revenues have not been able to keep pace with growing expenditure. Thus, the country is burdened with a huge deficit. Of equal concern has been a decline in our foreign reserves because we have produced very little to sell to the rest of the world; tourist spend has not been matching tourist arrivals, and we have developed a gargantuan appetite for foreign goods. How more ridiculous can we get than to spend over $700 million annually on food imports in a country blessed with conditions conducive to farming!
Since Independence, our country has had to seek the assistance of the International Monetary Fund on three occasions: 1978, 1991 and 2018, all stemming from the weaknesses already identified, in addition to world recessions, especially that of 2008. I am afraid we are likely to relive this experience in the near future unless there is a comprehensive restructuring of our economy, designed to EARN rather than BORROW foreign exchange; control any deficit incurred to manageable levels and limit loans to what we can afford to comfortably service. If we think that a change in government, a programme with the IMF and integrity legislation will be enough to transform our economy, we will soon discover that we are sadly mistaken.
For most of the period 1994-2007, the world economy was booming and Barbadians benefitted. Yet, danger signs were on the horizon. We were borrowing not only for projects and development programmes but also to boost the foreign reserves. Little attempt was made to restructure the economy, a point often stressed by Dr Clyde Mascoll when he wore a different political hat. Opportunities to vigorously pursue a policy of alternative energy and to promote Agro-industry were missed. Not surprisingly, therefore, when oil prices soared to a high of $140 and more per barrel, our import bill sky rocketed with the resultant increase in the use of scarce foreign dollars. Land prices went through the roof. In my own case, land I bought at $3.75 per square foot in 1988 had reached $30 by the early 2000s. And, of course, we continued to import most of the food we consumed. The country was, to all intents and purposes, behaving as though it had unlimited use of a credit card.
Enter the Thompson administration in 2008, with storm clouds already visible on the horizon. The worst recession in living memory came at a time when the fundamentals of our economy were not strong enough to cope adequately. Government response was not always effective, and recovery has been long and painful. This, though, is not to say that the government did not try. Attempts to build alternative energy and creative industry sectors, for example, are laudable efforts that should be credited to the 2008-2018 government. It is clear that Mr Thompson and then Mr Stuart and company were trying hard to save public sector jobs and to avoid any action that would imperil the social services and hurt the vulnerable. On hindsight, apart from its failure to communicate with a suffering public, the DLP government failed to rationalize state agencies and to get the export earning sectors of the economy working satisfactorily. Growth of tourism numbers was simply not enough to turn our fortunes around.
The point, then, is that the fundamental problems in our society were not created by the Stuart administration. These can be found in weaknesses in the structure of the economy which successive governments have failed to address.
John Goddard is a retired educator.