With the Barbados economy yet to show signs of growth, the Barbados Economic Society (BES) says it is still waiting to see fundamental structural changes.
In his reaction to the latest Central Bank economic review for the period ending March 31, 2019, BES President Simon Naitram said while the tone of the Central Bank was optimistic there was very little new information.
He insisted that the country was in need of a change in how business was being conducted in order to encourage economic growth.
“We continue to await fundamental structural change. Barbados needs a change in how we do business, in who owns business, and in what type of business we do,” said Naitram.
“We need to open our markets to competition, democratise business ownership, and expand our business beyond the mono-crop culture. Our focus must be on the specific policies the Government pursues rather than the numbers alone,” he said.
“The economy has not yet shown signs of growth. Total economic activity was 0.2 per cent lower in the first quarter of 2019 than the first quarter of 2018. The Central Bank does not expect 2019 to be the year that growth returns. In fact, they have raised concerns about the IMF’s lowered expectations for global growth.”
Naitram pointed out that Government was pursuing a growth strategy that appeared to be “very dependent on foreign investment and foreign consumers”, adding that the Central Bank was concerned about stabilizing the economy to attract foreign investors once again.
“This is the same basic growth strategy that we have pursued for the past few decades,” said Naitram.
He argued that in order to protect the foreign reserves, the country has typically pursued a policy of dampening domestic demand, which is essentially reducing the purchasing power of average Barbadians so that there are less imports.
He said while last year’s tax increases worked to dampen domestic demand, as consumer imports fell 2.6 per cent in the first quarter of 2019 compared to the first quarter of 2018, this stands in stark contrast to the Government’s plan to lower personal and corporate tax rates as proposed in Budget 2019.
“The Government’s stated aim is to stimulate consumer spending. Stimulating consumer spending and dampening domestic demand cannot both happen at the same time. Much rests on selecting the correct strategy,” he advised.
Pointing out that Government needs to spend less money than it takes in tax revenue, Naitram also reminded that Government must “show restraint” in how it uses the Central Bank and how much it gives to statutory corporations.
Tax revenue was 13 per cent higher in the first quarter of 2019 than the first quarter of 2018. The overall revenue intake, which reached $2.99 billion for the fiscal year, was boosted by tax measures outlined in the 2018 budget, including the increased personal income tax rates and corporate income tax rates at the time.
However, seemingly suggesting that there could be an impact on revenue collection in the future as a result of the recent lowering of corporation tax rates and personal income tax rates, the BES head said “The Government announced lower personal income tax rates and corporate income tax rates in this year’s budget. Can improved efficiency in collection offset the forthcoming decline in tax rates?”
Commenting on the financial system, Naitram pointed out that while savings available for investment were growing “Barbados is putting less savings to productive use” and this “makes us reliant on foreign investment”. marlonmadden@barbadostoday.bb
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SIMON, i know you is a good guy, i know your father your mother, your aunt, your borther SEITH, A DISGUSTING OLD FELLOW LOL,, but i think you just should not try to b e so much up front as yet, its just been about a year of the nw government, and i know by now you must have had your hands on some vital information, from ten years ago, and you know as well as i or any one else who seen the papers, know its a hard road back, you cant expect things to happen over night, dont be too critical, look and see for your self, dont be pushed or made to say thing for others, its a young life for the BLP it must creep then walk then run, dont be critical, as least not yet,
@Roger Parish: Typical of you B L P supporters, seems you know this young man and his family very well, therefore you don’t want to call him names in the usual B L P aggressive and abusive manner.
This young man is calling it as it is, he’s saying exactly what he sees. He’s obviously well versed in what he speaks, and obviously not a ‘simple Simon’. Listen to him as I quote below, as these are all things some of us have already said in this blog.
1. “We continue to await fundamental structural change. Barbados needs a change in how we do business, in who owns business, and in what type of business we do.”
2. “We need to open our markets to competition, democratize business ownership, and expand our business beyond the mono-crop culture. Our focus must be on the specific policies the Government pursues rather than the numbers alone.”
3. Government was pursuing a growth strategy that appeared to be “very dependent on foreign investment and foreign consumers”, adding that the Central Bank was concerned about stabilizing the economy to attract foreign investors once again.
4. “This is the same basic growth strategy that we have pursued for the past few decades,”
5. in order to protect the foreign reserves, the country has typically pursued a policy of dampening domestic demand, which is essentially reducing the purchasing power of average Barbadians so that there are less imports.
5. While last year’s tax increases worked to dampen domestic demand, as consumer imports fell 2.6 per cent in the first quarter of 2019 compared to the first quarter of 2018, this stands in stark contrast to the Government’s plan to lower personal and corporate tax rates as proposed in Budget 2019.
6. “The Government’s stated aim is to stimulate consumer spending. Stimulating consumer spending and dampening domestic demand cannot both happen at the same time. Much rests on selecting the correct strategy.”
7. Tax revenue was 13 per cent higher in the first quarter of 2019 than the first quarter of 2018. The overall revenue intake, which reached $2.99 billion for the fiscal year, was boosted by tax measures outlined in the 2018 budget, including the increased personal income tax rates and corporate income tax rates at the time.
8. There could be an impact on revenue collection in the future as a result of the recent lowering of corporation tax rates and personal income tax rates, the B E S head said “The Government announced lower personal income tax rates and corporate income tax rates in this year’s budget.
9. Can improved efficiency in collection offset the forthcoming decline in tax rates?”
Nine very valid points that has absolutely nothing to do with how long the B L P was in office. The party was in government before, they have seen this said strategy brought us to our knees before. The problem is, and has been for decades that both the B L P, and D L P seem to believe they can do the same economic nonsense better than the other.
It’s time for them both to stop loitering within the confines of parliament. There are others with fresh, vibrant, productive ideas armed with the skill set, knowledge and desire who are ready to take our country forward. We have been in this circle for too long, and seem to be passing this same junction too often.
GreenGiant, well said and articulated.
@GREENGIANT, i wont deny the fact that i know him, or his family, yes i do, all i was doing is giving the youngster some good advise, he has a job to do , but at the same time, use a bit of common sense, he have access to information in his capacity, he would know the shape of the economy, so dont be to quick to say some things, the government has only been in for a year, not 3 or 4 years, if it was that long length of time then it would merit his lash out, a foundation now need to be built in order for growth to start, i will let him know this personally in a few weeks time when i am back in barbados to rap up some things, and you should know that you shouldnt put your hand too far inot the lion mouth unless you are damn sure you can get it in far enough to choke that lion, he is a youngster, just about 26 or 30 yrs,
@Roger Parish: You can dress it up all you want. This government is building it’s foundation on the sand. That’s the point the young man is making, though he won’t make it as forcefully as many of us. He can afford to put his hand into this lion’s mouth, as this lion is similar to that at ‘Gun Hill’. Simply an ornamental lion. Let the young man be, and place that emphasis on advising your government to change direction on the march.
You supporters will always want to claim the
B L P only have been in office for less than a year, but the same B L P promised to do several things within the first six months. They then claimed they never knew things were so bad economically, when the only thing they never knew was that they would have been saddled with 30 persons to satisfy, plus their support crew.
The burden of restructuring an economy, while satisfying their cast of supporters, and faithfuls is taking a toll on this administration, and it’s leader. This burden has caused them to place the people’s priorities on the back burner to service their obligation to their faithfuls.
@GREENGIANT,, even if the BLP promise to do things in 6 months, and it didnt happened, you can blame them, the BLP BOUGHT A HOUSE, AND LITTLE DID THEY KNOW, THAT THE ROOF HAD NOTHING BUT WOOD ANTS, AND THE SIDINGS WERE PATCH UP WITH SOME POLLY FILL AND A NICE COAT OF PAINT, AND YOU HAD TO BECAREFUL HOW YO WALK IN THE HOUSE CAUSE YOU MIGHT DROP THROUGH, LITTLE DID THEY KNOW THAT THE HOUSE WAS SOLD TO MORE THAN ONE PERSON, AND THE DLP MADE OFF WITH ALL THE MONEY UP IN MIAMI LOL, MURDDDDAAA,, seriously there is no quick fix to this problem, we all know that, so we can well agree to disagree,, but i aint want no friends lol
@GREENGIANT i want you to know a lion is still a lino even if it in a circus, with the fangs pull out, and claws cut, when it roar you still know its a lion, cosmetic or not,
You missed the most important comment .Barbados Savings increasedand are being held in non productive Zero Interest Savings Accounts. $9.1 Billion and Growing . and we are looking to Foreign Investment to create Jobs. We have to use our own Barbados Dollars and put them to productive use. We should be funding building owning and managing our own Hotels and earning all of the foreign exchange .We need a balance. The Banks are charging fees on the savings .The Government should do the same.
Is Roger Parish admitting that the BLP administration is wicked and vindictive. Is he trying to shield a friend because he knows the spitefulness of MAM. The bullying follow me of perish ultimatum? How can he as a supporter of the BLP come out and say this? He should be cast out!
@BM i wasnt saying anything bad about MAM, all i was saying is that dont be too quick to come out and say things that have to come back and say i was wrong about my projections or views, one of the most embarrassing things to do is to have to come back and be eating your own vomit, that is what i meant when i said about putting your hand in the lions’ mouth, cause in these kind of situations you cant be too quick to run off saying things when he of him self, know the position of the country, so i would say to young SIMON in your quest for fame and make a mark in the working world be careful not to jump the gun, as i said in this case the government is only a year old, and cant do much with a termite shelled out frame, rebuilding is the only solution and it will take time, there is no fast fix to this,
so BM, please dont (misinterpretation) just ask for clarification, exegesis. explanation, and explication and i will sure be willing to expound,
MR SIMON NAITRAM, you must get all of your points and what ever else all together, then come back in a year time, cause if you get it wrong too early too fast ppl will say you dont know what you are talking about, and this can discredit, undermine your credibility, use the former GOVERNOR OF THE CENTRAL BANK AS AN EXAMPLE, he talk talk talk,he knew the troubles of the country,said nothing and did nothing, he cried wolf, now hehe want ppl to take him serious not one listen, learn from ppl mistakes, no matter how small,,
@Roger Parish: Young Simon, is well aware of the point you are making. However like him, we who are being practical though we’re accused of having only a political agenda can see there’s no real sustainable growth plan. It’s all about reducing the deficit, getting construction going, and still failing to address the foreign debt.
The foreign debt remains an weight around the neck of the country, and should have been addressed long ago, the destruction of disposable income will contract the collection of V A T, the reduction in corporation taxes will reduce revenue intake as well. So without a sustainable growth plan, a plan to reduce foreign exchange output, and and export thrust the economy will remain in a high risk category. This will scare investors who may be inclined to come in.
The retail, construction, and even the new hardware mega store will all require foreign exchange to operate. So there’s the equation Roger. Young Simon is simply seeing the same issues. If you remove your blinkers you will see the wide angle picture. Leave the messenger to get on with his work, and examine the message with care, instead of fear.