Mottley administration lauded for keeping economy on track despite challenges

By Emmanuel Joseph

Leading academics have given the Mia Mottley administration a passing grade for keeping the economy on track for improved growth, despite some major challenges experienced by the country during the past year.

In his assessment of the Government’s performance, as it prepares to observe the first full year back in power on Thursday, Dean of the Faculty of Social Sciences at the University of the West Indies (UWI), Cave Hill Campus Dr Justin Robinson on Wednesday gave the Barbados Labour Party (BLP) administration high marks for its management of the public finances.

However, Dr Robinson, who is also Senior Lecturer in Management at the UWI expressed disappointment that Barbados was unable to return to pre-COVID economic growth rates at the end of 2022.

“In terms of the management of the public finances, I give the Government a high grade in that the Government was consistent in being able to meet its targets and has remained on course and shown a lot of discipline in being committed to getting to that 60 per cent debt to GDP by 2035.

“That still remains the guiding light for which I give the Government high commendation for remaining on that course,” said the specialist in finance, accounting and econometrics in an interview with Barbados TODAY.

“I would say it’s been a mixed year as the Government continues to do very well in the management of the public finances. However, the wider economy continues to struggle in terms of achieving a level of growth in terms of the recovery from COVID. We still haven’t recovered that lost growth to GDP [gross domestic product], so at the moment it remains a challenge,” he stated.

The university professor said that in addition to the growth challenge, the Government struggled to mitigate the effects of international inflationary pressure.

“While 10.4 per cent GDP growth was recorded which reflected a significant rebound, it was still not enough to make up for the losses during the COVID-19 pandemic. So at the end of 2022, we were still not back to pre-COVID which was a bit disappointing and represents a major challenge for the Government in the management of the economy…because getting back to pre-COVID would really be seen as a new baseline,” Dr Robinson pointed out.

He suggested that it is going to be important to maintain that growth trajectory as he pointed to inflation as the major hurdle of the past year.

“It was also quite a challenging year in terms of inflation. In many ways, inflation was the big story. The Barbados economy suffered from escalating prices, gas prices and so on.

Most of it was linked to international factors beyond the control of the State in most cases.

But that certainly would have been the biggest economic story for 2022.”

Robinson noted that, despite efforts by the Mottley administration to cushion the effects of rising prices, “Barbadians struggled with really dealing with the difficult increase in the cost of living”.

While several commentators have been critical of the Government’s borrowing pattern, the UWI scholar does not consider it a challenge in relation to growth recovery.

“In terms of assessing the Government’s borrowing, I focus on two things. One, I look at the net borrowing, because while we tend to comment a lot on the amount that has been borrowed, what is not often commented on is the amount of debt that is being paid down,” he contended.

He drew examples of 2006 and 2007 when net new borrowing was $520 million and $1 billion respectively.

“If you look at 2013, the net new borrowing, that is, the amount borrowed less the amount paid down, was $1.2 billion, in 2017 it was $1.2 billion and for 2022, the net borrowing was $486 million,” Robinson explained.

Although he accepts that the debt is too high and it needs to come down, he said he focuses on whether the path being taken is going to achieve the 60 per cent of GDP by 2035.

“The Government is still on that path,” he noted.

Deputy Principal of the UWI and Professor of Economics Winston Moore also commended the Government for cushioning the economy as best it could from the adverse effects of external shocks.

“They have minimised the potential negative fallout from the external environment while still keeping the country on a sustainable fiscal path,” Professor Moore told Barbados TODAY.

“In terms of fiscal sustainability, we are on track towards fiscal sustainability if we look at the downward trajectory of all the traditional fiscal metrics. We are currently running a fiscal surplus, our debt numbers are on a downward trajectory, and once everything goes to plan, next year would see us achieving our fiscal targets that we have set for the BERT2 programme,” he predicted.

“Given the framework that I have outlined in terms of the uncertain external environment and the fiscal issues that we were facing, I can say that they have hit the target in addressing those two problems,” Professor Moore stated.

He recalled that at the beginning of 2022, the country’s main issue was the instability of the global economy and the fact that it had one of the highest debts in the Caribbean.

The senior university administrator noted that the fiscal position was one of the biggest constraints impacting the potential for growth in the Barbados economy.

“We have fiscal constraints and we also have a growing concern for external environments. Within that framework, the only thing a small state can hope to do, is minimise the potential negative impact of the external environment and put the fiscal on a path towards sustainability.

“If you look at what the Government has done over the last year, I think we can say we have minimised the potential negative fallout because unemployment has not gone up to like 20 per cent, it is still in line with historical trends. The growth in the economy is slowly coming back as we see traditional sectors starting to recover,” Professor Moore said.

He also painted a bright picture of the green economy, which he said is growing.

“We have seen the country continue to focus on green issues as a way of supporting growth as well as enhancing the overall sustainability of the economy. So there has been continued growth in the use of renewable energy on the grid. We have also seen the installation of a wind farm on the island, and there is another one that is planned. The Barbados Light and Power is also planning to have storage for all of this renewable energy on the grid,” he noted.

Head of the Department of Government, Sociology, Social Work and Psychology at the UWI Senator Dr Kristina Hinds said while the Government’s performance was mixed, she thought it did a reasonable job in handling its borrowing and foreign debt affairs.

“On the economic side, I know there is a lot of concern about the level of borrowing and foreign debt, and I think it is something that people need to continue to monitor.

I wouldn’t say it is an area where the Government has done poorly, but I think it is an area that requires continued vigilance,” Dr Hinds said.
She also gave the Mottley administration a conditional plus for its ability to respond to the concerns of Barbadians.

“On the whole, I would say that on the plus side, we have a Government that is quite visible and open to responding to public concern, which is a good thing especially compared to the Government we had prior – the DLP administration,” the senior lecturer said.

“On the flip side though, I think we also have to look into this and make sure that this public visibility and responsiveness is not more in the area of public relations than actual engagement with citizenry and consultation and collaboration,” the Independent Senator suggested.

She argued that there may be some fears that a lot of what we are seeing is about “optics” rather than a true commitment to consultation and engagement.

Dr Hinds thinks the Government’s performance in that area is mixed as well.

“It is good that there is this visibility and communication, but I am not always convinced that this is true and deep transparency, collaboration, or participation,” she stressed.

Dr Hinds added that the way in which the Government handled the controversial Inter-American Development Bank (IDB) invasive questionnaire that was administered to secondary school children without their parents’ consent has left a bitter taste in her mouth.

“We had some issues which I don’t think were handled in the best way, one of which was the issue with the IDB in the Ministry of Education. At this point, I am still not convinced that it has been handled or resolved, and I think that is a significant area of concern,” she said.
(emmanueljoseph@barbadostoday.bb)