Economic austerity ‘until 2025’

Six more years of fiscal medicine are what Barbadians can expect before the economy can recover fully, the Prime Minister has warned, less than six months into an International Monetary Fund austerity programme.

Using a range of metaphors as she presented her maiden budget speech since the Labour Party swept to power in May last year, Mottley appealed to citizens to “stay the course” to allow “antibiotics” to work effectively.

She told the House of Assembly: “The economy is no different to when you have an infection or you have to go on a course of antibiotics. You start to feel better after three or four days and you say the temperature down . . . . ‘I really ain’t feeling the pain as intense as I feeling it [before]; the fever going and I feel I could stop taking the antibiotics? The Member for St Philip North would tell us that we mad,’” she declared, adding that one cannot stop taking the medicine in the middle of the course because the underlying symptoms still exist.

But using a “hard drink” as an analogy for harsher fiscal measures, she ruled out the imposition of any such programme between now and the targeted period of recovery in 2025.

“And God forbid, you certainly can’t drink a hard drink, cause you really then don’t want the antibiotics to work,” the Prime Minister cautioned.

She then likened the country to a diabetic who cannot afford to stop taking medication for fear of going into “renal failure”.

The Prime Minister said: “The kidneys break down. The very time they should have stayed the course on the medication, they stopped taking it.”

She went on to urge Barbadians to “hold tight” because it would not be much longer before restoration and transformation come.

Mottley told the House: “Take the medicine. Stay the course. All will be well, but you have to stay the course. And that is my simple, simple, simple message to Barbadians this evening,” Mottley suggested, adding that a lost decade cannot be recovered in 10 months or in five years.

However she promised: “We are going to try for seven. And if we make it in seven and we recover what we lost in seven, we would be feeling almost like Usain Bolt. But we can’t do it over night . . . and we knew it; we saw the signs breaking down upon us…institutions imploding; no integrity of data . . . that is perhaps the hardest thing my Government has now to face.”

The Prime Minister also reported to the Lower Chamber that the foreign reserves had now increased from $400 million, when her administration came to office last May, to $1.1 billion as of today.

She said: “Over the past ten months we have pulled our dollar to safety. As of today, our reserves have risen from just over the $400 million that they were when we inherited them at the end of May last year, at its lowest point.

It was actually down to three hundred and change in March. But as of $400 million odd we inherited, today, our reserves stand at $1.1 billion.”

Mottley also noted that the target which the party’s manifesto set for raising the import cover to 15 weeks is to be achieved in the next few days.   

The Prime Minister also said that the Government was no longer financing its spending by asking the Central Bank of Barbados to buy its bonds with printed money.

“That Mr Speaker, has ended,” she declared.

The Prime Minister then turned her attention to “untendered” contracts and the outcome of renegotiating some of them.   

She revealed that Government will yield $25 million per year in savings with two-thirds of those savings already agreed to the Sustainable Barbados Recycling Centre (SBRC) deal.   

The Prime Minister disclosed that the contract with the Williams Industries subsidiary would now move from $24 million to $10 million in the next few years, resulting in a significant saving for the Sanitation Service Authority (SSA).   

She also reported that the SSA would save some $24 million in rent for the use of the Vaucluse headquarters building.   

Mottley told the House of Assembly that the negotiations on new debt terms with foreign creditors were almost complete. She did not elaborate.