The six-month progress report on the new administration’s economic rescue mission has raised more questions than answers, the leader of the United Progressive Party (UPP), Lynette Eastmond, has charged.
Eastmond, a former minister of international business in the Owen Arthur administration, contends that while Prime Minister Mottley touts the success of the Barbados Economic Recovery and Transformation (BERT) programme, there is still no mention of a growth plan.
In her ministerial statement to Parliament on Tuesday, Mottley boasted that foreign reserves had reached their highest level in four years, the dollar was no longer in danger of devaluation, debt-to-GDP ratio had fallen to 123 per cent and the country had received its first credit rating upgrade in 15 years.
“The plan has halted and reversed the six-year slide in our reserves, which have jumped from just $400 million to over $1 billion. Indeed today our Gross International Reserves stood at $1.044 billion – the first time since 2014,” Mottley said.
“Our dollar has been brought to safety… and in a few months we executed one of the largest exchanges of government debt as a percent of national income in world history. We will now save approximately $500 million of interest per year,” she added.
But Eastmond argues that most of these achievements were based on borrowed money and did not represent generated growth.
“While the international reserves appear to have improved, Barbadians must be mindful that this is based on borrowing and the Barbados Government’s decision to default on its loan payments. We however know that those who borrow must eventually pay back. So while we are being provided with fiscal space, the question is fiscal space to do what?” the leader of the two year-old political party questioned.
She told Barbados TODAY that her party was concerned that after six months in office, the Barbados Labour Party administration is yet to reveal a sound growth strategy and therefore “fiscal and tax policy decisions are being made which are out of step with the sectors most ready for growth”.
“One of these sectors is the creative economy and the [decision to introduce value added tax on online purchases] will hurt that sector the most but it will also hurt small businesses generally. There is no pride to be taken in the fact that other countries have not implemented this method of taxation. Other countries have not done so because at this juncture they foresee that the cost is greater than the benefit,” Eastmond said.
She also criticized Government’s recent decision to lower corporation tax from 30 per cent to a sliding scale of one to five per cent, noting that any benefits from this tax break were too much at the discretion of the private sector.
“There is no doubt that there must be some fall out in the loss of corporation tax upon convergence and that there is a potential loss in personal tax because of the lack of symmetry between the personal and the corporate tax rates . . . . The strategy however seems to be that of hoping that the private sector which will benefit from the reduced taxes will “do the right thing,” she said.