Reform, you say? Reform indeed!
Let’s all reform. They must not quit
The Golden Rule, and I from it will not stray once. That is our need.
– “The Old Convict”, HA Vaughan
The quote from our great poet-jurist-parliamentarian Hilton Augustus Vaughan are of the rantings of an ageing prisoner long used to life’s abuse but yet ring true for our national economy, still in its own jail these past ten years
Barbadians are living through lean times and likely will continue to do so for some time to come even as a tiny shaft of light appears to be at the end of the tunnel.
Even as the short-term economic outlook looks weak and Barbados is still in a recession – the tunnel, there are signs that stability and confidence are returning – the shaft of light.
The verdict of the latest Central Bank report reviewing the island’s economic performance for January to March this year suggests we are perhaps not yet at the beginning of the end but the end of the beginning as Barbados claws its ways back from the abyss.
Central Bank Governor Cleviston Haynes reported last Thursday that 2019 is on track to be another year of little to no growth. For the period under review, the economy only posted 0. 2 per cent growth and no significant improvement is expected by year-end with projections of growth between zero per cent and 0.25 per cent.
But things are slowly looking up. International reserves, which were dangerously low during the last administration, are up again.
Reserves rose by $64 million to reach $1.1 billion by the end of the first quarter.
And the Central Bank data show that the tough medicine of the Barbados Economic Recovery and Transformation Programme (BERT) is meeting targets.
Continuing layoffs and cuts in subsidies to state-owned entities helped Government to lower its spending. On the taxation side, Government raked in a significant haul.
The revenue intake for the fiscal year reached $2.99 billion or 29.3 per cent of GDP, of which $933.1 million came from January to March this year. Total revenue intake for the fiscal year ending March 2018 was $2.85 billion.
Governor Haynes is rightfully confident that the country will pass its next IMF test and even the ambitious target of achieving a primary surplus equivalent to six per cent Gross Domestic Product this financial year.
But what is troubling is the low level of economic activity for the first quarter when compared to the same period last year. The economy is still in a holding pattern.
Economists have attributed this to the pain of the fiscal consolidation measures, particularly higher taxation.
Simply put, consumers still faced with high supermarket prices, higher bus fares, higher water bills and more, do not have the disposable income to spend. Consumers are still anxious for relief. Businesses are still cautious, though there is buzz on the investment front with construction underway at Kendal Hill for the Kooyman Complex and at Boarded Hall for the Sagicor Retirement Village.
Other projects are on the cards and we anxiously look forward to the resulting jobs and other spinoffs.
Still, Prime Minister Mia Mottley and her team of economic advisors will have to dig deeper to get us out of this country’s financial mess.
Barbados remains in need of far-reaching structural reforms to rebalance the economy.
As the president of the Barbados Economic Society, Simon Naitram said growth must remain the watchword, and that growth cannot be hinged solely on foreign investment.
Said Naitram: “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.
“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.”
Certainly, Government has to spur more economic activity. But while we expect no magic bullet, Barbados simply has to stick to the task of these institutional reforms to help drive growth. Those reforms will help to improve the business environment so that investors can feel confident to bring their resources into Barbados, and also for local investors to start investing so that we can see more opportunities that will eventually lead to gain for all Barbadians.
For only root-and-branch reform of the way Barbadians make, earn, get and spend will ultimately free our nation from a sentence of debt, deficit and decline.