By Marlon Madden
Barbados will require a significant amount of non-debt funding for initiatives that promote economic growth if it is to drive down its high debt.
Professor Justin Robinson, Pro Vice-Chancellor of the Board of Undergraduate Studies at the University of the West Indies (UWI), Cave Hill Campus, who gave that assessment which is applicable to other regional economies, said Caribbean countries have struggled with a debt problem for many years because of low growth and having to borrow in order to respond to external shocks.
“GDP growth has been heavily constrained because of the vulnerability of a country like Barbados to external shocks,” Robinson said on Wednesday as he addressed a national debt and climate consultation organised by the Barbados Association of Non-Governmental Organisations (BANGO).
What is needed, he said, is a structure through which “non-debt related funding can come into the region to fund these types of initiatives, which will allow us to drive our GDP growth and get within sustainable levels of debt”.
“Unless there is a structure or framework for significant amounts of non-debt financing to come into the region and it is on concessionary terms, if the international community cannot create this structure, it is effectively saying that Caribbean countries, while you are stuck where you are, you are condemned to a future of high debt and significant development initiatives,” Robinson told those gathered at the Warrens, St Michael office of the Barbados Coalition of Service Industries.
He suggested that a “reparatory justice framework” could be used to generate some of the non-debt financing needed, as he cautioned that accumulating more debt to address traditional economic growth issues was not an option for Barbados and other regional economies at this time.
The university professor explained that reparatory justice should take into account the economic activity in Barbados and other regional economies prior to independence and self government.
“Because GDP is a stock that you add to and subtracted from year by year. The GDP of the UK today is impacted by wealth that was generated from whenever they started counting statistics, which go many years ago.
“So, a large percentage of economic activity and wealth-generating activities were never reflected in our GDP. So again, because of that historical legacy, I would argue that our GDP is understated because it only reflects in many cases that post-self government period and does not include wealth generated before that period, which is not true for many of the countries we are benchmarked against,” he added.
Presenting on the topic Caribbean Debt, its Colonial Impact and Present-day Realities, Reparation Implications, Robinson did not dismiss factors such as fiscal indiscipline also contributing to stunted economic growth and high debt in Barbados and the region over the years.
However, taking a historical look at the island’s economic performance between 1961 and 2021, he noted that Barbados had to contend with major external shocks which led to a cumulative economic decline and continued borrowing.
Robinson explained that at the same time, successive leaders have had to create a more modern society by building out infrastructure and investing in various sectors including health and education, which also led to more borrowing.
He argued that Barbados was among those economies caught in the “trap” of being labelled as middle-income countries, making it difficult to source affordable funding.
Professor Robinson suggested that steps to address the island’s growth problem include development of the human capital, environmental preparedness, improved productivity and competitiveness, fiscal prudence, the building out of a strong financial sector, and economic diversification.
