The Government’s retrenchment exercise is not a cue to the business community to follow suit – at least for now, the leading private sector spokesman suggested.
As he weighed in on the Central Bank’s latest economic review, the Chairman of the Barbados Private Sector Association Edward Clarke suggested that with major investment projects in the offing, there would be no reason for any layoffs similar to what the Government is currently undertaking.
“I don’t see that happening at this stage. I mean, various sectors might be impacted differently. I think that there is enough that will be happening in the next 12 to 24 months that there should be no need for those significant layoffs,” Clarke told Barbados TODAY.
While going on to say that one never knows, he still maintained an optimistic view of the employment situation during the coming years.
“I see no reason for that [layoffs]. I will expect that they should be increases in employment with the new projects coming on stream, and in the longer term, there will be more changes in employment structure. A lot depends on the investment. If the investments get off the ground as quickly as we expect, I am sure you will see additional employment taking place,” he said.
Turning his attention to the Central Bank’s report, Clarke said he saw no real surprises.
“The reserves are as expected. I think the Government obviously has started the plan for the restructuring as we know. I don’t see anything that is any surprise to anybody,” the BPSA leader said.
He suggested that everyone should recognize the need for Government to cut spending and this must be done, as was suggested by Governor Cleviston Haynes.
But the private sector spokesman was particularly concerned about that aspect of the Central Bank governor’s report which addressed the pressure from the Organization for Economic Cooperation and Development (OECD) – the forum of the world’s richest nations – regarding international taxation.
“Of note, however, is the threat posed to foreign exchange earnings and to revenues created by the pressure from the OECD to reform the international business legislation so as to remove perceived ring-fencing of that sector because of lower tax rates than those applied to firms operating in the domestic economy,” Haynes said in his economic review Wednesday.
The private sector head responded: “Very important matter with the revenue side and the OECD…. The decision on how we are going [to deal] with the taxation going forward. That is a very critical aspect of the programme… and they would have a significant impact going forward.”
Clarke predicted that within the next two years, the country’s economic fortunes will rise, although growth would be stifled “a little bit” in the initial stages but this, too, was no surprise to him, as expressed by the central banker.
“But we do expect significant foreign investment going forward and local investment. So, we should see some movement in the growth going forward and in the future… 2019…2020 onwards,” Clarke told Barbados TODAY.
He gave the assurance, as urged by the Governor, that the private sector will lead growth, as it has in the past.
“It has always been the expectation and should be so…. It has to lead growth. Government is there to facilitate the platform or the playing field, to make sure the pitch is rolled right and that the necessary approvals get approved, get done as quickly as possible and provide the environment for true growth in the economy and [attract] investment to drive the economy forward,” he declared.
Clarke did not commit himself to saying if he was concerned about the Government’s ability to meet the targets set by the International Monetary Fund (IMF) under the Barbados Economic Recovery and Transformation (BERT) programme.
He instead was more worried about the likely impact of rising oil prices and severe weather on the economy.
“I have no concern with the new projects coming on stream that would generate the growth and investment. But I think that the big challenge the Government will face [is] what happens if the fuel prices do change. This is something you don’t have any control over. Thankfully the hurricane season seems to have passed us. We pray that that has gone completely and it doesn’t have any damage in the foreseeable future,” the private sector spokesman stated.
“So those are the things we need to be wary of…. Things that you have no control over,” said Clarke.
The private sector leader expressed confidence in the Economic Policy Oversight Committee (EPOC) – the independent blue-ribbon panel of experts to review the Government’s fiscal policy and advise on whether the targets set out under the economic recovery plan are being met.
Clarke said he believed the committee will “work with Government to make sure that these things are done that need to be done in accordance with the BERT programme and the IMF”.
In his report, the Central Bank Governor presented a mixed bag of improvements in some key economic indicators and a decline during the third-quarter period and suggested that the situation would remain unchanged through the balance of 2018.
But Haynes predicted a slight turnaround next year, with the economy expected to realize growth of 0.5 per cent to 1.0 per cent, but that the actual outcome would be influenced by the speed with which new investments, particularly in the private sector, occur.
One of the bright spots identified by him included a stop to the slide in the international reserves, which increased by $104 million between late March and the end of September, almost 80 per cent of which occurred from June onward.
“As a result the gross international reserves which had been in almost continuous decline since 2012, recovered, enabling the import reserve cover to reach 7.4 weeks of import. Subsequent to quarter-end, the drawdown of the first tranche from the IMF raised the import cover to approximately 8.6 weeks,” the Governor added.