As the war in Ukraine drags on and there appears to be nothing that entices Russian President Vladimir Putin to end the senseless killing and destruction of his neighbour, Barbadians should reflect on several measures introduced in the 2022 Budget meant to create some insulation for citizens.
The conflict in Europe may appear to be geopolitical activities that should not concern us. That is far from reality as both actors in the conflict are global producers of key commodities including wheat and oil.
Readers should note that a quarter of the world’s wheat imports come from Russia and Ukraine. Wheat is an essential in the global food supplies, and we can imagine the implications of a shortage in Barbados of flour to make salt breads, cakes, and biscuits.
A company like the West India Biscuit Company (WIBISCO) in Bridgetown employs over 200 workers and is a major manufacturer and exporter. Can we imagine the implications for those workers at WIBISCO if it is unable to source flour, a vital input in its manufacturing process or if it had to raise prices significantly because of supply chain disruptions?
Russia is also the world’s largest fertilizer producer. And even before the conflict, there were spikes in fertilizer prices last year which contributed to a rise in food prices by about 30 percent.
There is no doubt that the ongoing, month-long conflict is everyone’s business.
Gilbert Houngbo, president of the United Nations’ International Fund for Agricultural Development sounded this caution: “We are already seeing price hikes, and this could cause an escalation of hunger and poverty with dire implications for global stability.”
The impact of the crisis on energy prices is also a major worry for energy importing countries like us, and especially one that is in the middle of an International Monetary Fund (IMF) programme, in which we are expected to maintain several economic targets and policy adjustments.
The World Economic Forum said the timing of this war could not have been worse for the global economy, just as countries were recovering from COVID-19 pandemic. It noted the conflict between Russia and Ukraine and tensions in the Middle East were stoking supply fears. This is contributing to rising inflation and concerns about economic recovery.
This brings us to the raft of budgetary proposals from Prime Minister Mottley that should serve us well given the energy challenges that we face as a country.
Among the proposals to facilitate the “greening transition”, public officers will be offered loans of up to $100, 000 interest free for the purchase of electric and hybrid vehicles. There will also be an excise and value added tax holiday on electric vehicles for 24 months. Both of these measures are effective April 1, 2022.
Also starting from April 1, government will revert to the ten percent import duty for used battery electric, while the tariff on electric and solar powered vehicles will be reduced to 10 percent. The import duties for vehicles powered by liquified petroleum gas and compressed natural gas will be reduced to 25 percent.
Another key element of the budget that helps to wean the country off fossil fuels is government’s stated objective that every Barbadian homeowner has the right to own and install photovoltaic systems on their roofs, without the hassle of the many approval processes.
When one considers the number of applications for commercial production of electricity using PV systems and wind turbines, it is obvious that Barbadian businesses and individuals have bought into the thrust toward energy independence through renewables.
As Mottley noted in her March 14 Budget: “The green energy transition is a fundamental pillar of our growth strategy over the medium term, a strategy that seems ever more relevant, given the conflict in the Ukraine and the doubling of oil prices in just 12 months.”
It was important too, the declaration that her administration was working with the Barbados Light & Power to develop a minimum of 30 MW of wind energy investment at Lamberts in St Lucy.
It was also laudable the promise to establish financial instruments that would allow ordinary Barbadians to participate in and own at least a minimum of a 30 percent share in the 30 MW wind project.
All this ties into the ambitious national goal of becoming a carbon neutral economy by 2030. There is still much to be done to achieve such a lofty objective. However, global developments have made it incumbent that we seek to protect Barbadians from the uncertainties that come with being so dependent on an imported energy source.
In the current structure, a global oil crisis could collapse our society and economy and no administration should allow the country to remain in such a vulnerable place.
