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Barbados Cannot Sustain Current Level Of Subsidies

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It seems that this DLP Government will be hell bent on subsidizing the operations of many commercial and industrial interests in this country. For example, and quite recently, an announcement was made by the Minister of Trade, Commerce and Consumer Affairs, Mr. George Hutson at a press briefing at his office, Reef Road, and attended by the Minister of Agriculture and Rural Development, Mr. Haynesley Benn, and others, that the Government will give a very short term price support to particular interests in the livestock industry in the form of the granting of a subsidy to the Manufacturers of Pinnacle Feeds in Barbados – now majority owned and controlled by regional corporate blood sucker Neal and Massy – so that Pinnacle Feeds would be able to return the prices of only layer, turkey, swine, sheep and diary feeds to what they were before the February 11 increases. It was also announced that the measure would cost government BDS $ 1.3 million monthly. (Source – Daily Nation, Tuesday, February 19, 2008.)

Added to that example, is another example of the subsidy that was being given by the former BLP Government to the Barbados Light and Power Co. Ltd, still apparently being continued by this DLP Government. But, certainly this subsidy will continue indefinitely given, too, that yesterday US crude on the world oil market reached more than US $ 101 per barrel. And, there seems to be NO likelihood that these great surges in world oil prices will dramatically come down any time soon. Too, this subsidy to the Barbados Light and Power Co. Ltd – another majority owned and controlled foreign business – will also continue because this government has made VERY STRONG commitments to reducing the COST OF LIVING in Barbados, which under this old nefarious economic order, is being helped fueled by these said astronomical, record world oil prices.

Finally, what this DLP government must be told in the clearest and strongest of terms is that while this subsidization of these particular interests in the agricultural and production sectors in Barbados is welcome in the short term, such an approach CANNOT be sustained in the foreseeable future without further WRETCHED AND UNRIGHTEOUS TAXATION ASSAULTS BY THIS SAID DLP GOVERNMENT ON THE MASSES AND MIDDLE CLASSES OF PEOPLE OF BARBADOS. Again, we leave the following: that a future PDC Government shall Abolish ALL TAXATION in Barbados, and will make sure that IMPORTS OF GOODS AND SERVICES into Barbados are zero-”priced” at ALL points of entry.

Source: Society for Mass Freedom Also Known as PDC

Our frequent poster who goes under the name of PDC (click on the image) is known for generously sharing their views with the bajan blogosphere. Although accused of being long winded at times, we do find merit in some of their postings. Some might argue that their positions are mired in ideologue and that an elected government might struggle to see the viability in rolling out many of their recommendations. On the point which they have made which is quoted above, we believe that there is merit to the concern which they are expressing.

The Democratic Labour Party (DLP) was recently swept into office on a promise that they would be instituting measures to reduce the cost of living in Barbados. As fate would have it the world price of oil has for the first time rallied at USD100+. It is well documented that successive governments have subsidized the price of oil to act as a buffer to the Barbadian consumer. It is against this background that the concern of the PDC is valid. How much longer can the David Thompson led government continue to subsidize oil prices? To tinker with the price of oil at this time would obviously act as a catalyst to FUEL inflation in the economy. If this were to happen it would compromise on the platform promise of the DLP. We are beginning to believe that the promises which Prime Minister Thompson made while as Opposition Leader have suddenly become somewhat challenging to implement.

We know of the government’s commitment to pay PINNACLE Feeds over 1 million in subsidy monthly to stave-off the increase in feed prices to farmers; there is the subsidy to the Barbados Light & Power initiated by the previous administration; there are many other subsidies currently given by government which have to be financed by taxpayers. We all look forward to see if the Thompson led government will roll out measures that will energize the nation to the point where we are able use our key resource, PEOPLE, to improve our productivity.

 

 

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23 responses to “Barbados Cannot Sustain Current Level Of Subsidies”

  1. Idiots Avatar
    Idiots

    “a future PDC Government shall Abolish ALL TAXATION in Barbados, and will make sure that IMPORTS OF GOODS AND SERVICES into Barbados are zero-”priced” at ALL points of entry.”

    That alone proves that the PDC is a bunch of a*ssholes.

  2. Thomas Gresham Avatar
    Thomas Gresham

    Responsible politics, which we require of our governments at least, is to recognise that there are trade-offs. (No taxation would be nice wouldnt it, and zero prices for our imports, but, er, how will we finance free education and health for all, quite apart from a little bit of redistribution.)

    Everyone likes a subsidy, but new subsidies cost money and worsen the fiscal position, which means either higher taxes, a higher deficit to be financed by foreign money or expenditure cuts elsewhere. Subsidies also allow an unsustainable situations to persist.

    I am a little ambivalent about the merits of this subsidy, and in the big scheme of things it is relatively small, but I note that we have heard about expenditure commitments like this subsidy and others and nothing on revenue raising or expenditure cuts. This must push us away from the government’s target of changing our fiscal position for the better…

  3. reality check Avatar
    reality check

    as a bare minmum, no politician should run for office unless thay have run their own business and proved that they can honestly and diligently operate a business, pay wages and supplies, balance a bank book and operate in the black.

    Why do we continue to elect people to a billion dollar government run business who could not operate a roti or fruit and vegetable stand?

    It is quite evident by now that the PDC has never operated a business and is trying to defy gravity and pay the governments bills with zero or little revenue. Instant poverty for all.

    The PDC could destroy Barbados economy overnight while it took Mugabe a generation
    to take Zimbawe from the breadbasket of South Africa to one of the poorest and most corrupt countries of the world.

    Maybe the subsidy should go directly into the hands of the small farmers who are more likely to get the best bang for the taxpayers buck?

  4. Dr. Justin Robinson Avatar
    Dr. Justin Robinson

    We are all rightly concerned about the state of fiscal affairs in Barbados, and are acutely aware that the new administration has pledged itself to fiscal prudence. However, the above argument fails to recognize that government is also about choices. In an era of unprecedented rises in food prices the government has chosen to use its resources to subsidize food prices. The nature of government is such that one cannot expect to see revenue generating measures or expenditure cuts each time a new spending measure is announced. The state has to respond to circumstances and make choices. We should reserve judgement on the fiscal implications of this humane or populist approach to food prices until time passes and we see the overall government program.

  5. David Avatar
    David

    Dr. Robinson we cannot argue with your philosophical response. Would you accept our observation that the ‘populist choice’ as you term it has a collateral angle which we have to consider. The level of subsidy which the Barbados government injects into its policy will have an offsetting influence on the behaviours of Barbadians.

    The world has become a very competitive place and many people hold the view that the only way Barbadians can become familiar with this reality of the situation is for the government to expose them a little.

  6. Dr. Justin Robinson Avatar
    Dr. Justin Robinson

    Your comments are quite fair and well taken,. My comments are based on the fact that by all measures there has been an exceptional an unusual increase in food prices around the world. The most vulnerable groups in society spend a relatively larger proportion of their income on food and as such are most affected by increases in food prices. In light of this, I am therefore unwilling to be critical of a choice to subsidize food prices until I see the entire government spending program.

  7. Dr. Justin Robinson Avatar
    Dr. Justin Robinson

    Forgive the typo in my last post. It should have read, “exceptional and unusual increases in food prices around the world.” I also believe that subsidies are a lesser evil than price controls in trying to protect the most vulnerable from price increases. An alternative approach by the government, might be to try to target the subsidies to particularly vulnerable groups in society rather than their being across the board.

  8. Thomas Gresham Avatar
    Thomas Gresham

    The best policy response to a concern that the poor or finding it difficult to afford food items is to target income transfers to the poor so that they can afford to buy the things that they need to buy.

    At the same time this also allows the economy to respond to the price signals that subsidies can distort. For example, the poor may take the extra income, but substitute their expenditure to other food stuffs and the price rises may well encourage local and even home production of substitutes.

    I have never consumed more food from my own garden that in the past 12 months, in part because I have become more conscious of the higher price of food. Of course many poor people do not have the land to do this, but the greater consumption of home-grown food helps to reduce demand-driven price rises on others.

    Subsidies on energy and food are politically attractive, but ultimately it means we defer making the kind of savings and substitution the price signal is telling us to make.

  9. Thomas Gresham Avatar
    Thomas Gresham

    David said that he liked references.

    You may find this interesting and tangentially relevant.

    Amartya Sen won the economics Nobel Prize in 1998 for studying the famines in Ethiopia and Bangladesh.

    His analysis was that famines were not actually caused by a shortage of food. In fact during the Ethiopia famines the famine-struck area was actually exporting food. The problem was that the poor had suffered some loss of income (“entitlement”) and could not compete with others to buy food. Supplying food or subsidising it, only helped the rich to buy up more food and export it. Food exports grew with food aid.

    Sen’s analysis was not popular because US AID used food aid as a way of supporting US farmers, but as a result of Sen’s analysis the approach increasingly used today in dealing with the potential of famine is not to send in food, or subsidise it, but to give the poor cash. This has led to substantial improvement in our ability to stop famines growing.

    This is part of a general conclusion that the best way to help the poor when faced with high prices of electricity, petrol, food etc is…..to make them less poor through income transfers and let the price signals work to change consumption patters in a more sustainable way. After all subsidies were why we had economies oriented towards sugar and bananas long after we should have moved into more viable areas…..

    These are thorny issues and I wish the government good judgement.

  10. Green Monkey Avatar
    Green Monkey

    And speaking of food prices:

    Depression + Inflation + Famine Chaos!

    Oftentimes it seems so inconceivable that we could have come to this place, yet here is exactly what we are facing, right now: Depression in the housing market; retail inflation (due entirely to the price of oil and the plummeting dollar), credit availability all but shut down, and today we discover that grain stores are at their lowest point since they began measuring in 1960: 53 days.
    According to the CEO of Potash Corp., the Canadian fertilizer giant, if there is any disruption to this year’s grain harvest, the world will be facing famine in 2009. And this is not a question of the rock-concert-for-third-world-countries famine, folks. He is describing global shortages of wheat. Food prices are already on the rise; with grain shortages, will surely come hoarding and hyperinflation in food.

    If you think times are getting tough, add a real food shortage. Now it’s time to grow backyard farms (Victory Gardens) – in fact it’s not at all a bad idea. You can’t eat grass (even in a brownie), so you may re-think the practicality of planting vegetables where your hydrangeas are.

    Who do we have to thank for this latest stunning fright-fest? Well, I would start with the laser beam on the agribusiness monster that has lobbied for years to convert thousands of hectares of American farmland to corn and keep the government subsidies coming. Surely you’ve seen commercials for ADM, “Supermarket to the World” – not that you are or even could be a direct consumer responding to their ads. So why do they run TV commercials during the Newshour?

    The answer is simple: it buys them a pass on reasoned discussion that might interfere with their agendas, for example, the decade-long touting of E-85 ethanol as the panacea to fuel shortages and import dependency (while providing 30% worse mileage!). Buying, in essence, the national discourse (as well as through tireless and costly lobbying) allowed them to muscle through acceptance of this ridiculous product that benefits nobody other than ADM (while giving GM a claim to lower emissions). But the result of their success is now a lot of low-power ethanol cars (a “Flex-fuel” Chevy Impala, for example will get you 18 mpg on gasoline, but only 14 on ethanol – great, no?), rather than focusing on real high-mileage vehicles.

    But with all that non-food-grade corn being used to make ethanol, there are now reductions in food stocks of both corn and wheat.

    http://smirkingchimp.com/thread/13002

  11. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    It is certainly very logical to find out why is it that we in these parts of world that were once colonialized by the Europeans and that are now subject to many, many forms of neo-colonization by present-day imperial powers, would still wish be so slavishly clinging to certain useless doctrines taught long ago by these said former colonial powers, and still being taught by present-day imperial powers at the core and by even our own present-day political and intellectual leaders. Of course, such doctrines falsely proclaimed, and still do, how very vital and necessary it has been for Economics and many other Eurocentric intellectual disciplines, their central themes and conclusions, and along with their almost wholesale adaptations/applications to our historical and contemporary cultural and social circumstances, to have been, or to remain still, thrusted at the centre of our own further growth and development as groups of collectives of people within these various spheres. One out of the many possible answers to the above would be question is that because most of us in these parts of the world still falsely see ourselves as being inferior to Europeans in many regards, we therefore tend to view whatever they “bring forth to the world” in terms of, say, a science, a doctrine, as being far better than what we ourselves can produce. Therefore, there is this wronged and potentially harmful tendency to reject much of what is our own whilst accepting many, many of the “products” of the Europeans.

    Nevertheless, a serious analysis of the historical development of, say, our own Barbados, against the backdrop of that kind of argument – that our contact with Europe has brought great results which would NOT have been possible had NOT for this type of contact – would surely lead to the conclusion that nothing could be so further from the truth!! As a matter of fact, while it is true that some aspects of these disciplines and their relatives have long led, and still do lead, to the bringing about of much growth and development for certain minorities of peoples within these particular spheres and for a certain few states, the vast majority of aspects of these disciplines and their relatives have certainly long helped given rise, and still do give rise, to the bringing about of great, and sometimes ever widening, disparities in income, wealth, knowledge, technology, weaponry, power, authority, etc., and esp. between those who are the wealthy and powerful minorities and those who are the poor and weak majorities in the former colonies (post- colonial states/societies), and esp. between those who are the wealthy and powerful minorities and those who are the poor and weak majorities in present-day peripheral states and societies, and esp. between those that are the poor and weak post-colonial states/societies and those that are the rich and powerful former colonial masters and present-day imperial powers.

    In short, whereas it must be said by PDC that the great proportion of all of the aspects of these relevant Eurocentric/Western disciplines and their relatives has been designed to greatly and unceasingly benefit Europeans and Westerners and esp. their elites, it must be said too by us that this same great proportion of all of these said aspects has been designed by the said Europeans/Westerners to bring about tremendous and perpetual losses to those who are the poor majorities within our societies, and to those that are the vast majority of these said societies.

    Which partially explains why for years TAXATION – a European invented ideology and practice, which has been at the centre of Economics in Barbados and elsewhere, where it has been so wickedly imposed by the relevant states in these territories, has been doing catastrophic damage to the poor and weak majorities in such post colonial states/societies and in such present-day peripheral states/societies, and untold damage too to their own marginal prospects for further growth and development, and to the vast majority of post-colonial states/societies and present-day peripheral states and societies. Not to forget damage to the industrial and commercial potentialities and actualities of such poor and weak persons, and their entities, and the relevant poor and weak states/societies, whilst operating in favour of those terms of such wealthy and powerful persons, and their entities, and the relevant wealthy and powerful states/societies, generally speaking, in such an international political economy context.

    For fellow bloggers’ information, we again provide a brief on non-eurocentric and non-Western strategies that a PDC Government shall implement in support of the Abolition of ALL Taxation in Barbados:

    1) A Drastic reduction in the size of the state/government in Barbados. Elimination of those Ministries, Department, and other agencies that are in themselves unnecessary, inefficient, resource-wasting, cost ineffective, and debt burdensome. Rather than doing such, this DLP Government will further increase the size of the state/government, and mainly for politcal reasons. At the same time, they will TAX/STEAL MORE OF THE RELEVANT PERSONS/BUSINESSES AND OTHER ENTITIES INCOMES, and borrow more to finance the operations of a far too big and unwieldy Barbados state/government. What will crtainly follow from this will be a bigger and more staggering government debt. And, what is also bound to continue happening is the preemption of otherwise greater growth and development of the private sector in Barbados;

    2) A sizeable increase in the entrepreneurial/commercial function and scope of many of those aspects of the state/government – remaining or to come on stream – and that would/would have already/could become commercially viable/that would have great revenue generating/profit making potential, and that would however remain as part of the state/government of Barbados – Seaport/Airport/the Industrial Estates/those state-managed, people-owned businesses that have commercial emphases – BWA, BNTCL/NPC, etc. Rather the DLP Government will make sure that many of these aspects are to continue being subsidized or receiving loan guarantees, while still barely subsisting or stuggling to survive;

    3) The passing of legislation that will make it a legal right of the state, citizens of Barbados, majority-owned Barbadian businesses and entities, to enter into the financial system and get institutional “loans” for productive purposes, and whereupon they shall NOT have to repay such loans. It is the height of absurdity to ask such persons and entities to repay money that would have already entered back in to the core financial system or that is bound to reenter it!! Too, ALL loans, productive or non-productive, shall carry NO INTEREST RATES, as that, these will be Abolished by a PDC Government. Such persons, businesses and entities shall however have to pay the administrative/transactions costs of such loans. These loans will be disbursed based on incomes received in any given prior income years. The state/government’s loans will have a maximum limit of about 4/10 of GDP. For sure, this DLP Government shall continue to demand that NOT ONLY will institutional loans for productive purposes remain repayable, generally speaking, but also that these wicked and horrendous interest rates regimes remain in place in Barbados; and,

    4) There shall be greater emphases put on equity finance as a means of the people/public of Barbados helping to finance many state/government commercial ndustrial operations, as opposed to the government borrowing money, locally or internationally, to help finance such operations.

    PDC

  12. (6 for a 9) Avatar
    (6 for a 9)

    The last government squandered over a billion dollars, surely a million dollar subsidy to assist in keeping meat on the plates of ordainary barbadians ca be justified.

  13. Linchh Avatar
    Linchh

    If a government determines that the provision of subsidies is a justifiable strategic response, then, these subsidies should be directed at producers with the objective of assisting them in lowering their costs. mechanisms will be required to ensure that the cost reductions are passed on to those people who are most in need (earning amounts below an agreed poverty guideline).
    Further, from a macroeconomic consideration, subsidies should be limited in time and amount.

  14. Member of BU Family Avatar
    Member of BU Family

    Lichh are you saying then that you don’t agree with the subsidization of the oil price. Successive governments have utilized this approach?

  15. Thomas Gresham Avatar
    Thomas Gresham

    Dear David,

    You are right that successive governments have utilised this approach. They have done so because it makes for better politics than it does for good economics.

    We all accept that politicians generally do what makes for good politics, but you, David, have made an important call for economists/academics to come on to the blogs to explain to a wide audience what the considered opinion is on the merits of certain important policies.

    Price subsidies as an indirect anti-poverty measure is at best wholly inefficient: (a) it benefits the rich as well as the poor and (b) it distorts the important signal being sent by prices (in this case the signal is that we need to conserve energy). I am not sure why my tax payers money should be subsidising the petrol going in to a Porsche.

    There may be a case – as Linchh as rightly suggested – for subsidies that are limited in magnitude and time, to deal with sudden changes, but not for ongoing subsidies.

  16. Brutus Avatar
    Brutus

    I would assume that the subsidies we are discussing are intended to be temporary until the government can implement more long term strategies to fight inflation, or until imported inflation starts to subside. The subsidies are inefficient from an economic point of view and distort consumer choices, but we live in the real world not in a controlled economic test tube. We can not live by text book economic theory alone.

    I think it is probably inaccurate to state that the BL&P is being subsidized – the subsidy is paid directly to the consumer by a credit on their monthly bill, for which BL&P is reimbursed. I am not sure how the subsidy on the price of feed will work, but I doubt that Government will subsidize Pinnacle Feed’s costs.

    Concerns have been expressed about where the money will come from to finance these subsidies. Remember though that the last government had over the past few years lowered tax rates on individuals and companies, and promised more tax relief if they had been re-elected. They clearly did not have the same concerns about financing government expenditure.

    The economists can correct me if I am wrong but my understanding is that inflation could bring a windfall in additional taxes to the government, as long as the economy continues to grow (higher VAT revenue and import duties for example).

    It also seems strange that local economists would get agitated about subsidies and price controls, but not voice the same level of concerns about spending on government capital projects. Government has a choice of where to spend taxpayers money – spend it on $100M flyovers or give it back to taxpayers. Isn’t this the trade off?

    At any rate we will shortly have the estimates and the budget so we will not have to guess as to how the government will finance these subsidies.

  17. Thomas Gresham Avatar
    Thomas Gresham

    Dear Brutus,

    As we have discussed before the capital expenditures are not generally coming out of current revenues/expenditures. Canceling the one-off capital expenditure on flyovers of say $100m (that has been converted into a expense stream of say $8m per annum on debt interest) does not lead to an extra $100m or even $10m to spend on on-going subsidies.

    The last government indexed tax brackets to inflation and so the “fiscal drag” (higher revenues through higher taxes) is more modest than before. But of course you are quite right that governments have choices and can choose to spend on increased subsidies and in turn raise debt if they are not serious about targeting a balanced budget or if they are, raise taxes or cut expenditure elsewhere.

    Tough choices. So far we have heard about the politically easy bit of subsidies but nothing else on how they will be paid for and/or phased out.

  18. Thomas Gresham Avatar
    Thomas Gresham

    Let me define “fiscal drag” better: this is the extra tax revenues that come from inflation leading individuals to tip into higher tax brackets.

    The extra revenues that come simply from the VAT on higher prices are likely offset by the inflation impact on government expenditure and costs.

    Given that the tax brackets were inflation-indexed in the last budget (perhaps the legislation was never passed) fiscal drag should be minimal, but where it is not, we must recognise this is not free money, but a form of increased taxation that is reflected in the higher share of national income that goes to the government and is less likely to be spent productively.

  19. Brutus Avatar
    Brutus

    Thomas Gresham, as far as I know the legislation to inflation-index tax brackets was never passed, not even among the last minute amendments on the last day of the last parliament.

    The flyovers are just one example – the trade off applies to all capital projects. I am simply questioning whether it makes sense to carefully scrutinize every last dollar of current expenditure (or foregone current revenue) while virtually ignoring the impact of hundreds of millions of dollars capital expenditure.

    What of the impact of wastage through inefficient project management? The economists and accountants should be jumping up and down about this.

    What of the potential for excessive or inefficient expenditure as a result of corruption in public procurement? What is the impact of this on government expenditure? How much could we save by bringing more transparency to this process, and how much of those savings could be diverted towards subsidies?

    What of theft of government funds due to poor financial controls? What of all the breaches of government’s financial rules that are reported each year by the auditor-general?

    I would like to hear the economists talking more about these real world issues, and less about the economic efficiency of subsidies versus reverse tax credits.

  20. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    It is quite disturbing that the DLP Government may have started the first sitting of this current parliament by introducing a supplementary resolution for $ 182 239, covering, et al, the cost of travel for officers (BDS $74 000); and the cost of utilities for a given period January to March 2008 ( BDS $ 50 000), as so required by the Ministry of Social Care ; and covering an increase in expenditure for the financial year 2007-2008 (BDS $ 40 239 ), as so required by the Ministry of Commerce – these things, based on a news story in the Daily Nation, Tuesday, February 26, 2008. Why would a new government be starting in such a drastic but desperate way, must be sufficient to show that there is something very fundamentally wrong with the way how the Government’s financial system is structured and run, and to show that there is something very fundamentally wrong also with how the state’s financial system is structured and run in relationship to the wider Barbados financial system.

    Moreover, at a time when this DLP government should have been better using the House of Assembly to let Barbadians know how it proposes to deal with the integrity and anti-corruption legislation that it has promised the country, in so far as its commitment is to help bring about greater levels of accountability and transparency in regard of the country, generally, and in regard of the affairs of government, particularly; and as well how it proposes to help reduce our skyrocketing cost of living in order to make life better and easier for Barbadians – altogether indicating a different managerial tone, style and substance away from that of the last BLP Government’s, which in its tenure, had been grossly and recklessly mismanagement of the affairs of state and country – hence, and in contrary fashion to this last BLP Government, indicating that it is going to be very business like, people’s centered and prudent in managing its own financial affairs and those of the country – this DLP has however given an early first impression that it will continue like the last BLP Government PRODUCING MANY, MANY SUPPLEMENTARIES AND HANDING OUT MANY SUBSIDIES, if this very first and very early supplementary is any thing to go.

    Finally, if a PDC Government had come into governmental office at the last election, today, there would by now have been initiated a process whereby a PDC Government would eventually be giving to ALL Relevant Divisions, Subsidiaries and other entities of the State itself the power and authority to earn their own revenues and to keep the excess money/value that they might have realized over what was allocated to them as their expenditure at the start of the financial year by the Finance Division of the State, with that money value allocated as such expenditure to be sent back to the Division of Finance for it in turn to return the money value to the Consolidated Fund.

    Also a process would have been started by A PDC Government whereby any Divisions, Subsidiaries and other relevant agencies of the State/Government would eventually acquire the right, in concert with the Division of the Finance, to enter into the financial system of Barbados and borrow money and would NOT have to repay it, given that such money/value would be used for productive purposes. Hence, in relationship to the way in which such Divisions, Subsidiaries and other entities would be managing their own financial affairs and, by extension, how such a State/Government would be correctly managing the financial affairs of the country, PARLIAMENTARY SUPPLEMENTARIES WOULD BE THINGS OF THE PAST AND ESPECIALLY SO EARLY IN A PARLIAMENT’S LIFE.

    PDC

  21. Thomas Gresham Avatar
    Thomas Gresham

    Dear Brutus,

    I have come to know you as an intelligent reasonable man who I enjoy discoursing with.

    It is the opposition’s job to give the impression that there is much waste and corruption, and the govenrment’s job to persuade us otherwise. The government failed to convince the electorate, largely (your point that I agree with) because it failed to implement strong integrity legislation and so its credibility was thin and every rumour, innuendo and suspicion was believed.

    But if anyone seriously thinks that Barbados was run in such a way that there will be a bonanza of savings to come simply because the new government is going to be so much more honest and smarter than then previous one, then I am afraid they are deceiving themselves.

    The Inter American Development Bank (IADB) focuses on issues of corruption in any country it lends to and as a result of (concessionary) lending for EduTech and the coastal management program, (other examples of capital expenditure where savings will not impact the budget because the money does not come out of current expenditure) it noted in its 1998 to 2004 evaluation: Barbados “is
    consistently ranked amongst the top countries in governance and social development indicators, and amongst the countries with lowest corruption indexes.”

    I recall Margaret Thatcher, Ronald Reagan and others being elected on the basis that would somehow conjur up “efficiency” savings without expenditure cuts and they were unable to do so, despite having a more ruthless approach to public spending than our government.

    But I am not going to labour the point because the proof of the pudding will soon be in the eating. We will soon see if the government is able to fulfill its spending commitments and its lower budget deficit promises. If it can, without cutting expenditure or raising revenues elsewhere, it will be because it has been more efficient and it will be a measure of the sloth of the previous administration.

    I suspect what will happen is that it will scale back its spending commitments and deficit reduction zeal and blame it on discovering a much worse fiscal position than it thought.

    Keep an eye on the rating agencies for an independent (if not always right) view, because if things are worse than thought they should downgrade us and it the government is doing the right thing, they will upgrade us. I suspect they will leave our rating unchanged.

  22. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    Correction: Line 12 and 13, paragraph 2 – “which, in its tenure, had beeen grossly and recklessly mismanaging the affairs of state and country”. The other bit inadvertently submitted.

    PDC

  23. Prime Minister David Thompson’s Day Of Reckoning On The Horizon « Barbados Underground (BU) – bringing the news to the people

    […] strategic objective of great priority. It is no secret that the government of Barbados continues to subsidize the price of oil at the ridiculously low level of USD65.00 which is a continuation of the policy of […]

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