A senior university economist says the Government’s $40 million COVID Relief Programme, though short on details, could stimulate economic activity in the island.
Dean of the Faculty of Social Sciences and Professor of Tourism Economics Troy Lorde said the 12-month measure, as a short-term stimulus, is timely.
“The short-term measures are meant to raise income and output in the short run. To have the greatest impact with the least long-run cost, short-term stimulus should be timely, so that its effects are felt while economic activity is slow,” he told Barbados TODAY this afternoon in response to the programme announced in the Throne Speech today by Governor General Dame Sandra Mason.
Dame Sandra said during the reopening of Parliament at the Lloyd Erskine Sandiford Centre that the relief scheme was aimed at going beyond just providing households with a cheque as part of the Adopt-A-Family initiative. She said the venture would put people back to work at least for the next year.
“The COVID Relief Programme will be designed to ensure that people in the country have work to which they can go. While the private sector fights to restore a level of economic activity and provide jobs, Government will play its part to ensure that the largest number of people possible is able to support their families,” the Head of State told the joint Houses of Parliament.
“These jobs will be provided by contracting persons for 12 months to carry out a range of activities across Barbados that are required to improve the quality of our life, our environment and our infrastructure,” she added.
“Examples of these activities include the hiring of monitors in primary schools to assist in ensuring that the children physical distance during breaks and lunch hour, as well as before and after school; engaging persons to assist the workers of the National Assistance Board in supporting services for our elderly in communities given their vulnerability in the times of this pandemic; the completion of the ‘Where Am I?’ project, that will see signs erected across all of our roads and communities; the enhancement of our food security through the engagement of persons to work at the island’s agricultural stations; and theallocation of allotments for agricultural production, to persons living in urban Barbados, through the soon to be established public-private partnership of the Lears Urban Land Lease and Food Security Project,” the Governor-General announced.
Commenting further on the measure, Professor Lorde said it fitted the criteria as temporary in order to avoid inflationary effects and to minimize the corrosive impact of a bigger budget deficit.
He also told Barbados TODAY the programme was well-targeted to provide resources to the people who most need them and will use them, because for the short-term stimulus to work, it is essential that the funds be spent, not saved.
“The 12-month COVID Relief Programme satisfies these criteria. I would say that the programme is currently short on details, such as oversight and the various sectors which will be targeted, and so on, although this might not be expected for a Throne Speech,” he stated.
Professor Lorde then turned his attention to the stimulus package for the productive sector. It includes the BEST Programme that will be a maximum of $300 million for hotels and tourism facilities as a response to COVID-19.
“My view of the stimulus to the productive sectors is that it is once again too tourism-intensive. Notwithstanding the current centrality of tourism to Barbados, the allocation of stimulus funds reinforces our dependence on this industry, one that is vulnerable to external factors and sentiment over which the country has no control,” the senior economist contended.
He observed that commentators and the public in general have in the last few months pointed to the need to diversify the economy.
Professor Lorde reminded that the nature of the global economy is such that Barbados will be back in this position every few years picking up the pieces from a debilitating blow to tourism.
“We are simply too blinkered where tourism is concerned. I feel this is a lost opportunity,” he said.
The $300 million package comprised long-term measures that include the efforts to help small entrepreneurs and citizens in developing their businesses.
“I particularly like the efforts to promote digital commerce. Providing credit to small businesses is also good, but the allocation is much too small. Small businesses make up the bulk of the landscape and much greater attention should be paid to this sector. Apart from providing funding, provision of advice to businesses that are lent funds is also needed to ensure as much as is possible their success,” the university professor stated.
Lorde also praised the stimulus which reflects the ongoing digital transformation of many Government services and processes which he described as critical and that could serve as a stimulus by itself.
“Similarly, continued efforts to improve the ease of doing business can act as a stimulus without expending funds. Serious improvements in these two areas would do a lot to improve the competitiveness of the Barbadian economy.
“Overall, I would suggest that what I have read reaffirms much of what we already know. It is bold in some areas, but conservative in others,” Professor Lorde contended. (EJ)