#BTColumn – The 2023 budget

Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.

By Ralph Jemmott

In delivering her 2023 Financial Statement and Budgetary Proposals, Prime Minister Mia Amor Mottley was arguably at her articulate best. The fluency of the speech was quite amazing. Our Prime Minister’s articulation and sense of personal self-confidence tends to have a reassuring effect on her audiences. Of course, what matters in a budget is not the fluency of delivery but the extent to which it attempts to solve the country’s many economic and social problems. In spite of the wishful thinking and hopeful schemes, the Barbadian economy is by no means out of the proverbial woods. Typically, the Prime Minister promises us a ‘First Class Society’ by 2030, in seven years’ time. Owen Arthur had suggested that Barbados was on its way to becoming a ‘First World’ country. One is not sure what a ‘First Class Society’ is or looks like, but it sounds nice. Who wouldn’t want to be ‘first class?’   

The problems of debt and deficits have not gone away and are not likely to do so anytime soon. As I write, the global banking system could be facing another crisis brought on by the issues at the Silicon Valley (SLV) and First Republic Banks in the United States and Credit Suisse in Europe. The 2023-2024 Estimates record a deficit of some BBD$844 million partly to be financed from foreign borrowings at a time when our sovereign debt remains substantially high. Since the debt restructuring programme in 2018, the local bond market remains problematic. 

We cannot allow the island’s infrastructure to fall apart and we cannot afford the welfare structures that shield the more vulnerable in our society to decay and atrophy. Some degree of borrowing, foreign and domestic, is an imperative.

As with the proverbial cake, the proof of the pudding is in the eating. The Budgetary cake is out of the oven and it looks good to some, but we all have different tastes. So we await the eventual eating.   

One of the genuinely felt responses to the Mottley Budget was that it was short on details, particularly in relation to critical issues such as the reform of State-Owned Enterprises and pension reforms. It is not to be expected that extended details would be given in a budget, particularly as they relate to such problematic issues. However, given the amount of extraneous chatter that crept into the speech, more time might have been given to those two concerns. Some critics suggested that the speech sounded more like a Throne Speech or a party manifesto. It read much like a promissory note designed to still our worst fears and provide hope for the future. At times, it appeared to be almost too full of self-congratulatory political bravura.

On the Wednesday 15 edition of Down to Brass Tacks panellist Mrs. Trisha Tannis, Chair of the Barbados Private Sector Association, made the instructive point that we should be wary about making judgment about the outcomes from the budget. In an extremely candid intervention, she stated that we say things with the best of intentions and she noted a tendency to celebrate success before we actually see it. In relation to the budget speech itself, she concluded insightfully that it went ‘very wide but not very deep.’ In fact, it was so wide that another panellist, Mr. Carlos Forte, opined that the budget was largely ‘a rehash’ of much that had been said and promised before. For example, there was again talk of the Pierhead Project and the change of the Treasury building into a residential complex. 

How soon can these developments be in fact realised? There is a prevailing suspicion that the Prime Minister is apt to promise too much too quickly, always with a propensity to pitch her vision at an absurdly political level in sweet sounding generalities. As they say, the devil is often ‘in the details.’ It may be interesting to note that Dr. George Belle has observed that Ms. Mottley’s Budget speech was unconventional in the sense that it was not steeped in the customary technical language associated with the exercise. One wonders why.

Administrations of any colour have tended to display an implemental deficit in fulfilling proposed policies and programs. One is not sure whether this represents the bureaucratic failure of a weak civil service or defects in the drafting of policy or an inordinately laid-back attitude in the Barbadian culture. What is sure is that if we are going to compete in an increasingly competitive world, our attitudes will have to fundamentally change.    

The Barbadian man or woman in the street often looks to a Budget either for welfare type goodies or at least for some release from the tax burden. Prior to the delivery, the DLP spokesman had suggested that given the prevailing economic circumstances, the BLP government would be forced either to raise taxes or lay off workers. This Ms. Mottley did not do, perhaps much to the embarrassment of the DLP President, but perhaps out of a recognition that the citizenry was already overburdened. But as Dr. Ronnie Yearwood has since reminded us, this does not mean that in a future mini-budget during the financial year, increased taxes and layoffs can still come. 

On the other hand, the existing tax burden was not considerably lightened. Since 1966, Barbados has developed a welfare system that would be the envy of more developed countries. For some time, slow to anaemic growth has put a strain on the welfare state, but some Barbadians seem to feel that the government can and should take care of them from the cradle to the grave. Governments of both hues have not sought to disabuse them of this notion. In fact, in some cases, for their own naked political purposes, they have encouraged the fallacy.   

The great expectation was that the Financial Statement and Budgetary proposals would promote substantive economic growth. But such growth has proven elusive. The government has clearly decided that tourism will continue to be the area from which growth, particularly in relation to foreign exchange earnings, is likely to come. This is understandable since in a highly competitive global marketplace Barbados still retains something of a comparative advantage. 

Tourism may be fickle, but it has built Barbados over the past five decades. The Budget announced that the Pendry Hotel would be constructed at Six Men’s St. Peter on the beachfront location of the former Nikki Beach Restaurant. In addition, the Royalton Hotel was expected to start construction this year as well, while the Marriott group was undertaking a $150 million upgrade to its properties. The long promised Hyatt Diva is finally to start and has apparently promised a $2 million fund for urban transformation.

Some other growth-creating projects are in the offing. Invest Barbados and Export Barbados are expected to build out the Newton Industrial Park in Christ Church. An ostensibly significant number of new businesses will establish operations in the expanded facility, creating a minimum of 100 new jobs for Barbadians. 

Another prospect is the push to make Barbados the hub for major film productions by providing incentives for film companies to produce movies and short films. One specific incentive is for film companies to receive a 25 per cent transferable tax credit on several eligible expenses directly related to the pre-production, production and post-production of films. Much of this is not new. The government should tell us how much revenue is derived from such a promotion. 

The prospect of a thriving Barbados fashion industry, a local Versace or Dolce y Gabbana, seems more like a mirage, but hope springs eternal. Who would have thought that little Robyn Fenty from Westbury Road would now be listed among the world’s rich and famous?   

The ‘We Gathering’ initiative interrupted by the COVID-19 pandemic is to be restarted in 2025. Again, it will be interesting to see how that project will function this time around.    

Whatever one says about the Mottley administration and the way in which it goes about doing things, it cannot be accused of sleeping on the job. It is difficult to imagine anyone within the current political class taking Mia Mottley’s place. Citizens must, however, not withdraw from rational critique. In the absence of an official opposition in the Barbados House of Assembly, all ideas must be encouraged to contend. 

Ralph Jemmott is a retired educator and regular contributor on social issues.