#BTColumn – An economic overhaul (Part I)

Disclaimer: The views and opinions expressed by this author are their own and do not represent the official position of the Barbados Today Inc.

by Guy Hewitt

‘It’s the economy, stupid’ was the catchphrase used successfully by the 1992 Bill Clinton campaign to speak to the importance of turning around the economy in moving America forward.

As a social democrat who believes in providing more opportunities, pursuing greater equality, and tackling social injustice, I appreciate that you must have a strong economy to generate revenue to make these egalitarian goals attainable.

However, as a social democrat I do not subscribe to the view that the economy is the be-all and end-all of everything.

I hold to the dictum of David Thompson, our late prime minister, that Barbados is “not just an economy, it is a society.”

Managing a small, open, island economy is far from easy. We lack economies of scale due to our small size.

Our openness makes us more vulnerable to external shocks. Further, our narrow resource base prevents us from easily diversifying to satisfy the varied demands of the population. As an island state, we are particularly vulnerable to global climate change, and sea-level rise. Natural calamities threaten our very existence as we recently experienced.

Notwithstanding a difficult wicket, Barbados in the past proved that these constraints can be overcome with competent leadership, good governance, sound administration and effective public policies including strong economic management. We transitioned from agriculture to tourism
quite successfully in the 1970s, and later transitioned into financial services.

We are far from there today.  This was all quite successful until the rules of the game were changed, and competition became fiercer. In all of it we as a people, who epitomised pride and industry, seemed to have lost our footing.

Consider where we are today. Consider the multimillion-dollar expenditure on an eight-plus member core economic team (not counting the public servants): two junior ministers, 1 ambassador and three fulltime advisers (and ignoring the multimillion dollars spent on White Oak).

Notwithstanding, World Bank data indicates that the Barbadian economy fell by 17.6 per cent in 2020, one of the 10 worse performing economies last year globally. Jamaica contracted by 10.2 per cent, Trinidad and Tobago by 7.8 per cent; even Dominica outperformed us contractingby 16.7 per cent.

According to the IMF our debt/GDP level for 2020 was 147 per cent which ranks Barbados as the seventh most indebted country in the world. Consider this alongside the 2020 Auditor General’s Report stating “As at the end of the financial year 2018-2019, Government has yet to publish any consolidated [financial] statements.

The absence of consolidated statements presents challenges, as the total debts and liabilities of the Government are not being accounted for . . .” We really don’t know how much
we owe.

Since 2000, Barbados’ annual economic growth rate has averaged 2.5 per cent, considerably below that of the 3.5 per cent global average. At the same time Bajans are struggling to make ends meet. MoveHub, using data from Numbeo’s 2020 Cost of Living Index to identify the most expensive countries to live in 2021, ranks Barbados as the eighth most expensive nation globally.

According to the 2020 World Bank Doing Business Report, Barbados is ranked 128th out of 190 countries. Jamaica ranks 71st, St Lucia 93rd and Dominica 111th. I specifically mention St Lucia as it has emerged as a direct competitor to Barbados across a range of sectors.

I include Dominica given that key consultants are being paid by both governments, but they clearly seem to be getting a better return on expenditure.

We brand ourselves as a leading Caribbean tourism destination, but our hotel stock is tired; we struggle to keep up with the newer, trendier, more salubrious properties.

When you review the leading luxury properties in the region and the cutting edge of the industry, Barbados barely makes in onto any top-ten list. When we do it is unsurprisingly with Sandy Lane, a Caribbean industry icon.

We position ourselves as a leading international business and financial services centre. However, on 1 July, when most of the countries negotiating the OECD-proposed global minimum corporate tax of 15 per cent signed on; some countries agreeing with carveouts or exceptions, Barbados was one of only nine countries that didn’t sign.

Barbados risks becoming isolated because not only did all major economies sign on, but so did many small international business and financial services centres such as The Bahamas, Bermuda, the Cayman Islands and the British Virgin Islands. By being at variance with the wider international financial community including CARICOM, Barbados risks jeopardising its international correspondent banking relationships.

When Belize was deemed to be acting carelessly it lost 83 percent of its correspondent banking relationships, crippling its business and financial sector.

As a nation, we must come to terms with the reality that this simply isn’t good enough. The BLP regime needs to stop prioritising the begging of international financial organisations and countries for help; stop being a victim and take our own future in hand.

They need to stop using the fiction of a ‘lost decade’ as a ruse as it pours scorn on the majority of Barbadians who voted in 2008 and again in 2013 to keep the BLP away from the reins of power, with good reason.

We need to face facts, get the right people, develop the right strategy, and put the right policies in place to chart our way to a stronger, more resilient and more diversified and sustainable economy.

We need to again be willing to boldly go with the vision, the self-confidence and character as we did in the past; such that even Lee Kuan Yew, the revered leader of Singapore, commended us.

We need to again ‘write our names on history’s page, with expectations great.’ To do this the economic engine built on what is now the 50-plus-year-old vision of The Right Excellent Errol Walton Barrow needs a major overhaul. Part II will speak to the proposed way forward. May the Lord continue to be the people’s guide.

Guy Hewitt is a candidate for President of the DLP. He currently lives and works between Barbados and Florida and can be contacted at guyhewitt@gmail.com