David,

Pity you didn’t hear it! But yet compare it to the Leader of the Opposition’s which you heard… crazy to pass judgement then?

Perhaps we can have a more informed debate with the facts! Anyway, compliments a reporter this is what he said:

“Historians will one day spell out for future generations the significance to Barbados of the Democratic Labour Party being called upon to lead this country in the early 1960s, the mid 1980s and towards the end of the first decade of the 21st century. Those have all been challenging times in our history. But history has also been kind in sifting the wheat from the chaff and crediting this party with foresight and exceptional leadership. The worst thing to befall a people is to discover that they may have been going nowhere but doing it with great tenacity. I have spent the past year trying to fathom what the previous 14 years was all about:

Building capacity while our primary and secondary educational facilities, polyclinics and hospital were crumbling.

A construction boom that left public officers in worse accommodation and thousands of citizens without a piece of the rock.

Social programmes that increased poverty and the working poor in an era of high economic growth.

New structures of government that meant less accountability and greater corruption.

Gladly, as a people, we have turned that page. We are today, however, caught in the midst of a global economic crisis that forces us as a nation to rethink and restructure our concept of and approach to development. Policies and programmes as adumbrated ten, five or even three years ago are today not relevant or not practical as we seek to navigate our island through this maze of global uncertainty. I said over the weekend, that Barbados has always been ascribed and has over the years humbly assumed a major leadership role in Caribbean development. When we chart a path forward for Barbados, we do so in the full knowledge that that path will serve as a blue print for sister nations in the region. We have therefore an added impetus and responsibility to be prudent and wise in the crafting of social and economic development policies, particularly in the short to medium term.

It is in the context of pursuing our national and regional responsibilities that the 2009/10 estimates of revenue and expenditure have been created. One very important objective of this year’s Estimates is the sending of correct signals and messages to society in general and critical productive sectors in particular. We wish, by our utterances and actions, to reflect an element of confidence and sure footedness, while at the same time acting responsibly in the allocation and management of our scarce resources. Our objective is to maintain ‘a steady hand at the wheel’ while at the same time lay the substratum for a sustainable growth path for the next three to four decades. In preparing this year’s package, the government has been clear in its acknowledgement of and adherence to five broad principles; these are:

1. Create the most compelling environment for conducting business and attracting investment;

2. Become the most environmentally advanced ‘green’ country in the Caribbean and Latin America

3. Invest heavily in a culture of innovation and entrepreneurship.

4. Be known as the “Island That Works”. This idea suggests that we ALWAYS find creative solutions through National Teamwork (traffic chaos).

5. A People come first focus.

All of us will agree that in comparison to the nature of reports and commentaries emanating from Europe and the United States; especially the hardships being encountered by millions of families and workers around the world, this country is fortunate not to have as yet experienced that level of adversity and decline. In this year’s estimates, and as will be reflected in the upcoming budget, we shall seek to maintain a steady hand while reaching out to and shoring up those sectors in need of encouragement and assistance at this time.

As was gleaned from public responses to President Obama’s near trillion dollar stimulus package in the United States, there is no magic formula to addressing and resolving the challenges that confront world economies at this time. Guesstimates range from 18 months to four years. Some analysts predict conditions will get worse, others believe we have passed the worst. I will not seek on this occasion to mislead this Honorable House or the country into believing that somewhere in my files today or in the proverbial ‘black box’ I will be bringing to this chamber shortly, resides the solution to all our problems.

There are those in this Chamber and outside who believe that somehow were they standing before this microphone at this time, the streets of Barbados would automatically be lined with gold and rivers would flow with milk and honey.

I would be the first to concede that over the course of the next few weeks, months and years there will have to be reviews and a shifting of emphases and resources. No practical fiscal policy can be etched in stone, given the environment in which we live and operate today. Therefore these estimates represent an approach that responds to current and anticipated challenges and also make provision for adaptations and adjustments as may become necessary, given the very dynamic environment in which we operate. Every morning we awake, Mr. Speaker, we rush to read the newspapers and listen to the radio and television news to discover the new challenges that confront us.

Therefore, I stress that our approach over the course of the next financial year will be one of setting and pursuing relevant and realistic goals, while at the same time, positioning ourselves to respond to situations as they arise. My appeal at this time therefore is for us to temper expectations with reality and commonsense. We must wrap our ambitions in the colors of the national flag. We must endeavor to do nothing that is deleterious to the national well being. We are called upon as leaders to set forth examples. Others will be looking to Barbados and to Barbadians for guidance and inspiration in how we handle these challenges. It is left to us as a nation and as a wise and enlightened people to pursue, in the short term, strategies and initiatives that would stave off our coming face to face with the hardships that are being experienced by millions around the world in countries with far greater resources and capacities than we do.

Mr. Speaker the current international financial challenge has seen the collapse of large financial institutions in the major capitals of the developed world. The result has been a crisis of confidence occasioned by the combination of bad decision making and outright scams such as the Madoff Affair commonly called “Pyramid Schemes”. The very essence of capitalism has been at stake as Governments in Western Industrial countries have used public funds (taxpayer money) to bail out financial institutions and other troubled businesses.

It has also revealed some of the worst excesses of unbridled capitalism, such as excessive corporate compensation and perks and in the case of Citigroup and the Auto Industry, plain arrogance, as executives begging for taxpayer money showed no interest in curbing their appetite for excesses. The late Adam Smith must be turning in his grave, as Governments have now taken ownership of certain areas of the private sector, in order to save their economies from collapse. The merger mania of the recent past has led to the creation of mega entities which have proven to be inefficient and too big to be allowed to fail because of the systemic consequences of such.

No one knows when things will turn around. As I said earlier, the estimates range from 18 months to four years, but one thing is certain: people need to have confidence in order to begin to spend money and invest again. The environment therefore has to encourage such behaviour. Closer to home the recent troubles experienced by CL Financial Group can have contagion for the economies in which the entity operates, if action is not taken to ensure that the institution does not default on its obligations, thus causing a crisis of confidence. I have just returned from a meeting of Caricom Heads of Government in Belize.

While this was only my third as Prime Minister of Barbados, I am a keen student of politics and would have analysed these meetings over the years. It is clear to me and is a view shared by several who have been attending such meetings in the past 15 years, that this was perhaps one of the more purposeful and productive sessions in recent years. If one analyses the latter-day cynics and critics of Caricom and the regional integration movement, there is a common thread in the reasoning and motivation for why such persons have adopted the now predictable postures that they have in relation to Caricom and the role and work of leaders. I saw in Belize a cadre of individuals concerned about and committed to the task of strengthening and re-focusing the movement that is charged with carrying forward the work of building a more united and integrated Caribbean. It is clear that the role and place of Caricom in 2009 is much different to 1994 or 1999 or 2003. We have had enough time to see how some of the initiatives are working and we have had time to reassess the next steps. It was not this cadre of leaders that put the “e” in CSME in abeyance! That decision was taken by those who are the biggest critics of Caricom and who are now saying “we have lost a year”.

The same can be said for those who have been the intellectual driving forces of the integration movement who now cannot understand that times have changed. There is a new generation of intellectuals and consultants, with new ideas and perspectives, who must be allowed to take their place. While principles and philosophy may be immutable, the structure and emphases change. I also had the opportunity of holding several discussions with Caricom counterparts at the Prime Ministerial Sub-Committee on the CSME as well as the extended two-day caucus session on several of the issues that confront us, both individually as well as collectively. Barbadians are not to be conceited, arrogant or abusive about it, but it is vital that we recognize the mantle of regional leadership that rests on our shoulders at this crucial period in the region’s development. And to get where we are going, we don’t have to be bullies. We don’t have to threaten and declare war. We can discuss and come to a solid collective conclusion.

The spectacles of the financial challenges in our region require a regional stance. We have all now accepted that! But that was not the original position. I salute the collective resolve of the OECS leaders to acquire the failing Stanford Bank by using their national banks. Regrettably, that is not an option for us in Barbados – we don’t have a national bank!

But the first steps in the CL Financial affair led, regrettably, to countries taking very defensive national stances. My position from the beginning – and I reduced that to writing to my regional counterparts in the OECS only three days after the T&T Central Bank took action on February 2nd – on those terms. I said essentially that Barbados will not step away from its regional obligations and I remain committed to that assurance. Our solutions have therefore to be seen in a regional context. And I am pleased that that compelling outcome emerged from our Belize meeting. The Trinidad & Tobago Authorities have taken certain steps aimed at safeguarding the interests of the depositors in that country. The Barbados operation is part of the group and therefore the problems being faced by the Trinidad Holding Company will impact on us. We must therefore take the necessary action to ensure that confidence is maintained in our financial system. I shall be taking to Cabinet shortly proposals aimed at protecting the investments of Barbadian policyholders.

And I have already instructed the Government owned entities which have deposits with Clico Mortgage & Finance not to move any money except it is in the normal course of business to meet obligations. I might add that I have signaled to Prime Minister Patrick Manning that one initiative that would go a long way would be an agreement by the Trinidad government that it would not seek to enforce the injunction granted in the Trinidad courts in respect of CL Financial’s assets in the Eastern Caribbean. I speak here, therefore, not strictly in the context of political and administrative leadership but in relation to fiscal policies and the manner in which we navigate the turbulent economic waters that threaten our very existence at this juncture. Barbados is called upon to show forth a calm head, a steady hand and an inspiring approach to problem solving. It is comforting to know that I can rely on the collective strength of our people – through the Social Partnership, on the buses and beaches, in churches, offices and rum shops – to go forward with confidence and pride. Ralph Gonsalves said, and I agree, that a crisis is a bad thing to waste.

I appreciate very much that the OECS leaders have invited me to their Heads Summit in May 2009 and to address the Opening Ceremony. They have also set aside time on the first day for us to discuss areas of cooperation. This is a noteworthy development.

We also face an attack from the developed countries in relation to the designation of Barbados as a “tax haven” with potentially dire consequences for our country and region. Barbados has been asked again by our CAROCOM partners to coordinate the efforts in relation to our defence of our status. The Prime Minister of Bahamas has been designated to deal with the threat of new legislation in the United States Congress. I have been asked to focus on the European countries. That is why we cannot and must not squander the goodwill that we have earned. That is why we dare not become restless or irresponsible in our approach to current economic challenges. Not only would this harm and undermine our medium to long term interest but would also send very dangerous and confusing signals to those who look to us for guidance and inspiration. We are not flawless but we must never be arrogant and undermining in our relationships. This year’s estimates seek therefore to fast track those aspects of the Pathways to Progress we deem necessary and timely under the circumstances. We seek herein to preserve the high standard of living to which our people have gotten accustomed. We seek to main and wherever possible increase employment. We seek to provide opportunities and incentives for investment and business expansion. We seek to improve and modernize our infrastructure as well as safeguard the environment. We seek to reinforce the social safety net to respond to the needs of the obscure and most vulnerable. This is not the time, we believe, for sweet sounding nothings. The economic ship of state is going through some turbulent waters and the immediate horizon is not rosy.

We shall do all in our power to minimize hardship and social dislocation. With the continued cooperation, confidence and well wishes of civil society, we are confident that Barbados will ride out this period and emerge stronger and more resilient in the medium to long term.

Review of Financial Year 2008-2009

The original budgetary programme for fiscal year 2008-2009 was designed to produce a deficit on the cash basis of 2.2% of nominal Gross Domestic Product (GDP) at market prices, calculated on the International Financial Institutions’ (IFIs’) basis. On the accrual basis, the net operating balance was projected at negative 0.5% of GDP. The key macro-economic variables, upon which the fiscal programme was based, were real GDP growth of 3.0% and nominal GDP growth of 6.1%; inflation of 3.3%; import cover (goods and services) of 17.6 weeks; Tourism GDP growth of 1.7%; Traded sector growth of 1.6%; and Growth in retained imports on a fiscal year basis of 5.2%.

The fiscal programme for 2008-2009 approved by Parliament on March 25, 2008 showed current revenue of $2,762.1 million, current expenditure (exclusive of amortization) of $2,696.4 million and capital expenditure of $317.7 million. The key macro-economic variables for 2008-2009 have been revised with real GDP growth expected to be 0.7% and Import cover (goods and services) of 15.5 weeks.

Revised Current Revenue 2008-2009

It was originally estimated that current revenue of $2,692.3 million would be collected during the 2008-2009 fiscal year. Provisional fiscal data to January 31, 2009 shows that Government collected current revenue of $1,974.1 million, an increase of $32.4 million or 3.4% more than current revenue for the same period in fiscal year 2007-2008. The revised current revenue for the year is $2,536.8 million. This is $155.5 million less than the original. This is also $5.6 million or 0.2% less than the actual amount collected for the 2007-2008 fiscal year. Taxes on property are expected to decrease over the corresponding period last year by $11.7 million to $133.3 million. It should be noted that during the 2007-2008 financial year there was a thirty-one (31) day amnesty, which ended at March 31, 2008. This amnesty resulted in the increased collection of revenue. Taxes on goods and services are expected to increase by $28.8 million to $1,093.4 million. The increase in this category of tax is mainly as a result of VAT which is expected to increase by $9.5 million and other goods and services and Highway revenue which are expected to increase by $11.8 million and $8.2 million respectively as a result of various increases on items announced in the Financial Statement and Budgetary Proposals of July 7, 2008. Taxes on incomes and profits are expected to decrease by $35.8 million or 3.9% from the corresponding period last year mainly because of decreased profits of the International Business Corporations due to the global economic crisis.

Special Receipts are projected to increase by $14.3 million or 22.4% to $76.5 million as a result of the Environmental Levy, for which rate changes were made during the Financial Statement and Budgetary Proposals of July 7, 2008. Taxes on international trade should realise $215.0 million, a decrease of $1.9 million or 0.9% over the corresponding period last year.

Revised Current Expenditure 2008-2009

Provisional data from the Accountant General to January 31, 2009 indicates that Government incurred current expenditure of $2,432.5 million (inclusive of amortization), an increase of $58.6 million or 2.5% over current expenditure for the same period in fiscal year 2007-2008. It is predicted that current expenditure for the year (inclusive of amortization) will be $3,027.9 million. This is also $106 million less than the amount approved (on the cash basis) for the 2008-2009 financial year. Expenditure on wages and salaries is projected to decrease by $17.0 million due primarily to the payment of arrears of salaries and wages for the period 2006–2007, along with increased salaries, in the 2007-2008 financial year. Expenditure on goods and services is expected to decrease by $17.4 million or 4.8% from 2007-2008 to $339.4 million even though the following supplementaries were approved:

 $6.5 million to cover rental on accommodation for Government Departments;
 $3.4 million to meet outfitting costs of buildings which house offices of Government and International Agencies;
 $6.99 million to carry out road improvements and pay consultants for Quantity Surveying, Engineering and legal services on the Barbados Road Network Infrastructure Project.
 $109 million for the Special Projects

Current transfers are expected to increase by $62.1 million or 6.1% over 2007-2008 to $1,069.5 million. It should be noted that the following supplementaries were provided during the year:
• $20.0 million for the Barbados Tourism Authority;
 $11.2 million for the Barbados Water Authority to assist with operating expenses;
 8.0 million to cover the cost of travel of school children on Transport Board buses;
 $33.6 million to finance BNOCL for providing subsidised fuel oil to the Barbados Light and Power Company Limited;
 $15.0 million to finance rebates for subsidized diesel used by manufacturers, farmers, fisher-folk and Public Service Vehicles;
 $15.0 million for the Tourism Relief Fund.

Total debt payments for 2008-2009 are expected to be $19.7 million or 2.4% more than the previous year. Total interest costs are projected to be $356.1 million, an amount of $12.6 million more than recorded in 2007-2008.

Revised Capital Expenditure 2008-2009

Capital expenditure is expected to decrease by $46.3 million or 19.4% to $191.8 million in 2008-2009. This amount is also $43.6 million less than the amount approved for the year.

Capital assets are expected to increase by $4.0 million or 4.6% to $91.8 million in 2008-2009. Capital transfers are expected to decrease by $49.5 million or 34.8% to $92.9 million. This is also expected to be $12.5 million less than the amount approved despite supplementaries of $7.6 million for the Rural Development Corporation and $8.5 million for the Barbados Water Authority to assist with capital works.

Revised Fiscal Balance 2008-2009

The revised deficit of $212.9 million represents 2.9% of GDP at market prices.

Revised Deficit Financing 2008-2009

It is expected that revised financing of $627.1 million or 91.8% of the $683.0 million fiscal deficit will be financed by domestic sources. The balance of $55.9 million is expected to be financed from foreign inflows in respect of externally funded projects. At the end of December 2008, total Central Government debt was $5.985 billion, an increase of $308 million over the corresponding period in 2007. Government Guaranteed debt stood at $1.06 billion at the end of the last financial year. This total excludes the $127.6 million now being serviced by Central Government and which, therefore, is included in Central Government’s debt.

Fiscal Framework for 2009-2010 Financial Year

The fiscal framework for the 2009-2010 financial year has been formulated to attain an underlying deficit, on the cash basis, is set at 5.4% of GDP. We believe this to be manageable in the context of what needs to be done to stimulate the economy and achieve our objectives without compromising our current international standing.

Projections for Financial Year 2009-2010

The fiscal programme presumes current revenue of $2,792.2 million on the accrual basis, current expenditure (exclusive of amortization) of $3,014.2 million, and capital expenditure $204.5 million.

Current Revenue 2009-2010

On the cash basis, current revenue is projected to increase by $184.1 million or 7.2% over the revised 2008-2009 level to $2,720.8 million. The $2,720.8 expected to be collected is also $28.5 million more than the amount approved for 2008-2009. The estimates of current revenue for 2009-2010 have been constructed on the basis that there may be a real GDP decline of 1.9% and nominal GDP growth of 1.7%; Inflation of 4.5%; Import cover (goods and services) of 15.2 weeks; Tourism GDP decline of 4.5%; Traded sector decline of 2.5%; and a decline in retained imports of 5.4%. Taxes on incomes and profits are projected at $948.3 million on the accrual basis. Income tax is expected to increase by $8.5 million or 2.5% to $350.8 million. Corporation Tax is projected to increase, rising by $12.0 million or 2.5% to $488.3 million. Taxes on property are expected to realise $148.0 million, an amount of $14.7 million more than was collected during 2008-2009. Of the increase of $14.7 million, $9.4 million relates to property transfer taxes while $5.3 million will relate to land tax.
On the accrual basis, taxes on goods and services are projected at $1,204.6 million. Taxes to be collected on goods and services during the year are expected to rise by $71 million or 6.5% to $1,164.4 million. This tax category receives its principal impetus from receipts of VAT and Excise Duties, which are expected to contribute $833.3 million and $178.0 million respectively to the Treasury in the fiscal year. Import duties are projected at $236.1 million, increasing by $21.1 million. Special receipts are expected to increase marginally by $3.9 million to $80.4 million. Non-tax revenue is also expected to decrease from the amount approved in 2008-2009, declining by $35.6 million to $135.0 million. The Government of Barbados is expected to receive grant income of $10.0 million from the European Development Fund.

Current Expenditure 2009-2010

Current expenditure, exclusive of amortization of $395.6 million, is projected at $3,014.2 million. When converted to the cash basis, and bad debts and depreciation expenses are excluded, current expenditure is expected to increase by $362.3 million or 14.2% over the 2008-2009 revised figure to $2,920.1 million. Wages and Salaries are expected to increase by $103.9 million or 13.4% to $876.5 million. The increase is due to the new salaries and increments. Expenditure on goods and services is expected to increase by $23.2 million or 5.2% over the approved figure for 2008-2009 to $471.0 million. Current transfers are projected to increase over the amount approved in 2008-2009 by $83.4 million or 8.8% to $1,030.1 million. The major areas of increases in current transfers are as follows:
• Transport of pupils – Increase of $8 million for the free travel of school children on public transportation.
• $10 million for the Tourism Industry Relief Fund.
• Increase of $25.6 million for retiring benefits.
• Increase of $6.0 million for Invest Barbados.
• $1 million for the Graeme Hall Swamp.
• $9.1 million to assist the BWA with the payment of interest on the $150 million bond issue.
• Increase of $1.5 million for the constituency councils.
• Increase of $7.0 million for the QEH.
• Increase of $10 million for the Barbados Tourism Authority.

Interest payments in 2009-2010 are expected to increase by $71.7 million or 17.7% to $475.8 million due to new loans. Amortisation of $395.6 million is projected, decreasing by $106.8 million or 21.2% from 2008-2009 due to some loans having been paid off.

Capital Expenditure 2009-2010

Capital expenditure is projected to decrease by $28.2 million or 12.0% to $204.5 million. Capital assets are projected to increase over the revised 2008-2009 figure by $13.8 million to $105.6 million. The amount is, however, expected to be $14.2 million less than the amount approved in 2008-2009. Capital transfers are projected at $93.7 million, $0.8 million more than the revised figure for 2008-2009 and $11.7 million less than the figure approved in 2008-2009. Some of the major areas of capital expenditure are as follows:
• $10.0 million for the UDC;
• $6.2 million for the RDC;
• $10.5 million for the ICC WT20 2010;
• $7.0 million for the UWI capital works;
• $8.0 million for the NHC to refurbish and carry out electrical upgrades to selected Estates along with other infrastructural developments;
• $1.2 million for the renovation of police stations;
• $2.6 million for vehicles for the Fire Service;
• $1.0 million to provide for work on various bus terminals;
• $2.5 million to continue works at the St. John Polyclinic;
• $1.3 million for work at the Geriatric Hospital;
• $19.1 million for the non-recurrent aspect of the Edutech programme.
• $6.5 million has been provided as a capital transfer to the CARICOM Development Fund.

Fiscal Balance 2009-2010

As indicated previously, current revenue of $2,792.2 million is expected to be collected, of which $2,647.2 million is tax revenue and $145.0 million is non-tax revenue and grant income. Total expenditure of $3,614.3 million consists of current expenditure of $3,409.8 million and capital expenditure of $204.5 million. When amortization is taken into account, a deficit of $406.4 million on the cash basis is expected, representing 5.4% of GDP. On the accrual basis, the negative net operating balance is $315.7 million representing 4.2% of GDP.

Deficit Financing 2009-2010

In 2009-2010 it is expected that $743.9 million or 92.7% of the fiscal deficit on the cash basis will be financed by domestic sources. The balance of $58.1 million will be foreign financed in the form of capital project inflows.

Major Activities During 2009-2010

The major activities that will be targeted during the 2009-2010 financial year are as follows:
(i) A current subvention of $157.0 million is being provided to the Queen Elizabeth Hospital;
(ii) A subvention of $90.0 million has been provided to the Barbados Tourism Authority to facilitate marketing and promotion;
(iii) The sum of $6.0 million has been provided for Constituency Empowerment;
(iv) Invest Barbados has been allocated the sum of $19.0 million to carry out its operations;
(v) The Barbados Tourism Investment Inc. has been provided with a capital transfer of $15.3 million to undertake projects;
(vi) $0.5 million has been provided for an early warning system which would identify any changes in the various economic variables and allow adjustments to be made on a timely basis;
(vii) $19.2 million has been provided for the operation fee at Vaucluse;

(viii) $25.0 million has been provided for the education sector;
(ix) $2.5 million has been provided for the purchase of new vehicles for the Fire Service;
(x) $1.5 million has been provided for the Revolving Seed Capital Fund;
(xi) $5.2 million has been provided for repairs and construction on Secondary schools; and
(xii) $3.3 million has been provided for the new ID Card Project at the Electoral Department.

It is to be noted that during the 2009-2010 financial year, funds will also be provided for one-off activities and, in some cases, to stimulate the economy. These areas, which account for 0.7% of the deficit, are as follows:
• $10.5 million for the ICC WT20 tournament which is to be held in 2010;
• $6.5 million for the CARICOM Development Fund;
• $11.6 million for the special project on road improvements;
• $12.0 million for continuing works on Secondary, Tenantry and Subsidiary roads by Rayside and C.O. Williams;
• $10.0 million for the Tourism Industry Relief Fund.

Countercyclical measures

Barbados, like other countries in the region, lacks the fiscal space to pursue any extended fiscal stimulus programme given falling tax revenues and weak performances in the major traded sectors such as tourism, which fell by 1.7%. Nonetheless, we put in place a Special Working Group on the Economy which was mandated to craft a Short and Medium Term Action Plan for Barbados. The group recommended a list of policies and actions that may be taken and their expected outcomes. Many of the recommendations are short-term in nature while others are geared towards improving Barbados’ level of competitiveness.
To date the following actions have been undertaken:
• The government has gone to the Trinidad and Tobago market to borrow up to US$150 million to support its foreign reserves and protect its fixed exchange rate. This is also being done in anticipation of Government’s accelerated development programme in 2009 which will be undertaken in an effort to counteract some of the negative impacts of the global financial turbulence;

• A Council of Economic Advisors has been created and is expected to give advice to the Prime Minister;
• In terms of fiscal policy, while government has limited room for spending to stimulate the economy, it has been agreed that any stimulus should be directed towards projects with high social and environmental impact and activities that are capable of replacing some of the lost employment in the construction sector.
Consequently, during the current financial year, $10 million was provided for a special project on road improvements while $15 million was provided for the Tourism Industry Relief Fund. During 2009-2010 a further $11.6 million and $10 million will be provided for the road improvements project and the Tourism Industry Relief Fund respectively;
• The National Insurance Board is to finance and purchase two properties at the cost of $56.65 million and $54 million respectively. These properties will provide accommodation for public sector employees and are to be leased by the government from the National Insurance Board.
Overall, any countercyclical policies will be aimed towards protecting existing jobs and preventing any negative social fall outs.
Financial Services Commission

A Financial Services Commission will be established to strengthen the regulation of the financial services industry local as well as international. The Consultancy to Advise on the Implementation, Design of the organizational Structure and Related Services, has been awarded and should be completed in twelve months. There is no doubt that some of the problems pertaining to the financial services industry internationally have been caused by weak or inadequate regulatory frameworks. The issue of Madoff is perhaps the most glaring, but in other cases, the collapse of financial institutions can be traced to the absence of an effective regulatory system. It is imperative that we maintain an image of being well regulated domicile with no tolerance for the illegal activities of money-laundering. Barbados cannot be considered a tax haven or secrecy domicile, since it cooperates with its treaty partners and is expanding its network of double taxation treaties. Furthermore, Barbados network of double taxation treaties include provisions that allow the exchange of information about taxpayers between the parties to the treaty. However the recent regulatory weaknesses exposed with the collapse of major international financial entities has demonstrated quite clearly to us the need to strengthen the regulation of our financial services industry. The establishment of the Financial Services Commission will consolidate the functions of the Supervisor of Insurance & Pensions; the Securities Commission; the regulatory functions of the International Business Unit of the Ministry of International Business and International Transport and certain aspects of the Cooperatives Department.

The establishment of a Financial Services Commission will facilitate the funding of one agency adequately instead of having several agencies with varying degrees of inadequate funding. This project is being implemented at a cost of US $4.125 million.

PROGRAMMES OF MINISTRY OF ECONOMIC AFFAIRS

1. Monitoring the implementation of the Short and Medium Term Action Plan: This plan, which was approved by Cabinet, will be a major document to help chart Barbados forward. It will be the responsibility of key ministries and agencies, the private sector and labour to ensure the policies put forward and well implemented.
2. Implementation of a Monitoring and Early Warning System: Strengthening the research and planning arm of the ministry through the creation of a system of leading economic indicators which will be used to better inform on policy.
3. Competitiveness Enhancement Programme: Subject to Cabinet’s approval, Economic Affairs will be charged with the important responsibility of implementing this project, which will help to improve Barbados’ competitiveness position.
4. Strengthening Technical Assistance Programme: Work during the period to strengthen our relationships with development agencies via closer interacting and discussions and to see how best Barbados can benefit from assistance to help it in its development programme.
5. Better Coordination of Policy: This will be pursued during the year by quarterly meetings of the Joint Economic Group (JEG).
These meetings will involve person from the key economic ministries and the Central Bank.
Improve Public Communication: During the period the RPU will organize a yearly seminar and the publishing of economic and statistical materials to help inform the public on matters pertaining to the economy. In addition, the RPU will step-up plans to have a website develop so that information can be more easily access by the public.
6. Strengthening of the Barbados Statistical Service: Continue to work with the BSS in the implementation of this important IADB funded project.

Conclusion

Mr. Speaker, I wish to appeal to Hon. Members to depart from the norm somewhat, in their approach to this annual Estimates Debate. As I said earlier, our emphasis should be on sending correct messages firstly to our fellow countrymen, as well as our brothers and sisters in sister nations. We must strive to raise the standard of our debate so that by the end of this process. Barbadians are more enlightened and inspired by the capacity of their country to weather current economic challenges. If, as leaders, we listen closely to the messages of ordinary Barbadians, we would discern that they expect in a course of our deliberating on such issues, a narrowing of the partisan, political divide. Our countrymen and women want this Parliament to be more constructive in its deliberations and its output. As far as I am aware, and I think I would know if it was otherwise, there is no plan to call general elections in Barbados in the next 24 months. The public demanding therefore that as elected parliamentarians we focus in this Hon Chamber on utilising our skills, knowledge and intellect in the creation of a sustainable strategy for going forward. I challenge Hon. Members, in the process of their contributions to this debate, to be so guided.

Conversely the Leader of the Opposition Mia Mottley’s opening salvo was very economics focused. A couple members of the BU household were impressed by her wide-ranging grasp of the economics issues currently challenging the country. She was scathing in her criticism but equally generous in her praise of of some government initiatives. Refreshing to note was the insight presented on some policy initiatives which the Opposition would like to see implemented.
______________

David, Ms. Mottley and the BLP also confused us.

She complained that the reserves declined but Owen Arthur said only a few months ago that we should use up our $2 billion reserves during these difficult times! Which strategy is right?

The four points made by Ms. Mottley in her first 20 mins were that Thompson introduced too many taxes, that he increased deisel prices, that he increased the cost of living and that he curtailed the capital works programme.

Ho hummm… What is so brilliant about these points which have been made 10 times already?

Are we in a world economic crisis? Or is Barbados an island unto itself? Get real guys.

Thompy and his cohorts are status quo politicians.

Don’t expect anything too different from the same ole, same ole.

After so many years as an independent nation, I think the average bajan need to move beyond being a diehard party person. I’ll state it here now, I have a STRONG bias for the DLP but if they do or are doing something that in my opinion I disagree with, I would state my objection. In so doing I would consider myself more loyal to the party than many who follow blindly. No party is perfect and leaders need persons who are willing to point out a difference in opinion when it arises. The most important thing, to me, is that I am a PROUD BAJAN and I will remain patriotic to my country first and to a political party after. I know the P.M means well and we should all rally around him at this time to assist him in putting this country back on a firm footing, even if it means making some sacrifices. We as a people never really had to struggle, for me if I had to return to three big rocks and wood to cook some breadfruit, I would, knowing that they are many who don’t have the previlege to do such/

@Scout: Your approach makes a lot of sense. I don’t think you are alone in this approach. Many BLPites did not approve of the last term of the BLP, and i am sure that if Thompy don’t do what is right for the majority of DLPites they too will say so. As for cooking on three big rocks and wood. That is called roasting or Barbecuing, and um aint nothing to be ashamed of.

I will be cooking outside a lot for the next six months.

@wuh?
You are doing a good job with these clearly partisan responses.

How did Mottley set herself up for that almighty lash that Min Donville Inniss delivered to her by stating that she should be the last to complain about conditions of public sector workers after all she had the most lavish of offices to be found in this part of the world complete with a Urinal, Bidet and Sofa, that was a class act in terms of delivery and the timing was fantastic, this thing really has balls to be talking as she does, even more funny is that Owing has left her to cock it up once again and sit back and smile at her stupidity.

Owing is purely bidding his time to pounce on the leadership issue trust me Mottley is nothing more than a care taker person, with either Dale or Owing sitting back and waiting for the edge to come to slips.

@Wuh

How come you posted the Prime Minister’s speech ONLY?

What about Mottley asking about the lack of allocation under the relevant heading to improve transportation given its importance to national productivity?

What about the lack of a clear strategy to pursue a renewable energy program given the need to wean Barbados from fossil fuels?

@livinginbarbados

Not sure we are following your analysis, you have not factored the almost grinding to a halt constructions sector on the West Coast and the trinkle down impact on the economy. Do you forget that the sustain economic boom which Barbados enjoyed for more than 10 years was significantly based on that sector? What about the decline in tourism and the lag affect in spending? In simple terms please!

@ Anonymous,

Let us raise the bar. You may have difficulty keeping up. Don’t be shy to ask Adrain Hind for assistance.

Here are my notes of what I believe Miss Mottley said yesterday.

I may not get it totally right due to my total delight with the presentation.

Nevertheless here goes:

As I sat here listening to the Prime Minister introducing the Appropriation Bill, a picture of Lewis Carroll’s Alice in Wonderland came into my mind.

And in particular these words spoken by The Mock Turtle: “Reeling and Writhing, of course, to begin with, and then the different branches of arithmetic — Ambition, Distraction, Uglification, and Derision.”

Ambition – Over projections in terms of Revenue Growth;

Distraction – these Estimates are the platform for the next 50 years;

Uglification – the continued shifting of blame to the BLP as a diversion to their non-performance;

Derision – best describes the response of the Minister of Finance to criticism.

It is clear to us on this side, Mr. Speaker that the Prime Minister is ill at ease when discussing matters pertaining to the management of the economy except perhaps, like today, in circumstances where he is scripted.

He knows all the right rhetoric but is woefully short on detail or substance or context.

Unfortunately, this is not the environment for posturing.

If ever there was a time when we needed someone in charge who understands how to manage this economy it is now.

As I said at a meeting of the Barbados Labour Party a few days ago Mr. Speaker, we are in uncharted waters and as Columbus found out five hundred years ago the world is not flat.

Like history’s most famous sailor we have left the Old World behind us. People are looking to the Prime Minister to provide leadership in these perilous times, but instead what we see is a man playing politics with the economy and the welfare of the entire nation.

We charge that the Prime Minster has a basic lack of understanding of how this economy functions and the things he must do to first stabilize the situation and then to spur growth.

And the evidence of the charge can be found in the Government’s Estimates of Revenue and Expenditure.

There is a total disconnect between what he claims is the Government’s economic policy and what exists in these Estimates.

And you know Mr. Speaker, whenever the Prime Minister finds himself in a tight spot he reverts to the cry that the international economy is in a bad way.

While we accept that, it does not absolve him from his responsibility to act.

As a small open economy, the fact that we are susceptible to the vagaries of the international economy is nothing new.

Every Minister of Finance in this country since Independence has had to face crises not of their making. The test is how they managed them Mr. Speaker.

The Right Excellent Errol Barrow had the challenge of starting the modernization process of the economy and the first oil crisis of the early 1970’s; Tom Adams had to face the energy crisis of 1979 and the recession of the early 1980’s, former Prime Minister Sandiford had the 1990 recession and the Rt. Hon. Member for St. Peter had the 2003 recession among other global events. So while the task ahead may appear daunting this does not mean that we should adopt the wait and see attitude that presently afflicts the Government.

When I reflect on these Estimates 2009-2010, Mr. Speaker, it reminds me of the famous soliloquy from Macbeth : “a tale … full of sound and fury signifying nothing.”

I have deliberately left out the few words that may be viewed as unparliamentary.

These Estimates are a reflection of a Minister of Finance and a Government that is uncertain of what to do and when has therefore placed the economy, and by extension, the country, in a holding pattern.

At the very time that the Minister needs to be aggressive in his policy he backs off like a shrinking violet.
————-

Now compare that to the froth Thompson uttered.

Them couldnt help the country before how comes they could help the country now stupes and stupes some more…..

I aint want to keep up with the hypocrisy I dont want to know one shite Mia amor say I just dont want to see them beack in power for the next 15 years.

A pack of vindictive persons.

If I May…

May I please challenge everyone here to please step forward, and start to use their *real* names?

This anonymous crap is pure bovine excrement!

It is kindergarten level excitement and entertainment.

It doesn’t scale!

We have serious work to do. Let us please get to it!

If you have something to say which is worth hearing, then you should be prepared to put your name behind what you have to say!

Let us *PLEASE* get past this.

But she said thedecline in the reserves was $400 million and Owen said $800 million! She said there should be a stimulus and Owen said we shouldn’t! Its madness on the other side.

@ Tell me Why

If only this government, which promised “freedom of information” would give timely information – then knowledgeable persons will be able to make sound judgments about the economy.

The figure of $700 million plus, which Mr. Arthur used – is the amount that the reserves declined by under Thompson’ mismanagement – during the past nine months.

That has nothing to do with the guarantee of $700 million given by him to the OECS on behalf of Clico or the $600 million plus it will cost to purchase those shares in BNB, Thompson promised.

The deficit will be more like $2.3 billion.

1991 and IMF here we come!!!

I wonder if this clown Slyvan Greenidge has factored into the equation the bringing to book the vast huge sums expended on projects such as the road works, oil storage facility, the prison to name but a few that contribute in excess of $ 500 million to ourspending and thank god the DLP over office otherwise the Hardwood, Road Works and the Hospital would have killed us off in a hurry, the roa works alone we have the huge sum of $ 80 million being paid out to Bizzy Williams, Hallam Nicholls, Glyne Bannister, Owing See Thru Arthur, Steven Hobson, and Danos, what do they all have in common bold faced crooks. ask them where they stashed the excess $ 80 million , if after COW Williams and Rayside have completed all the work and have been paid in full and still the difference between what they have been paid and the money spent on the project is excess of $ 80 Million where else has the money gone because these are the only two contractors on this project, so where has it evporated to ask the ones mentioned above.

Tell me Why // March 19, 2009 at 8:11 pm

What is hard in understanding. Probably $2 billion was available at the time, however if you drawn down on the amount, surely we will have a decline. You don’t need strategy, you ned commonsense.
————————————————-
What is the difference between “draw-down” and “Used-up” ????????

@ Adrian Hinds

I think you use several useful words, “consistency” and “confusion”, and it will be interesting to see if either or both are really at the root or it’s just politicking, which thrives on both words.

On “stimulus package”, I focus on that because it suggests something very specific that people can then look toward and say “here are special measures and let’s see what they do”. The government says its actions are providing appropriate stimulus (and the bigger forecast deficits seem to support that argument; one could argue about the mix that contributes to this). Some others are asking for a package, which may not be necessary or useful. Those who ask for more need to be honest and say how and when it will be paid for.

David,

As I write, it has come to my attention that – on the instructions of PM David Thompson – the Governor of the Central Bank of Barbados – has been summoned to a meeting at Clico where she is right now – telling staff not to worry, that Clico is sound.

Why is the Central Bank of Barbados being being subjected to such vulgarity?

This is the level of corruption from a so-called “squeaky clean,” government.

Now tell us, apart from Parris’ wife and Thompson’ wife being involved in a company and buying one of several properties across Barbados ($925,000 cash) what other financial interests does Thompson have in Clico and with Leroy Parris?

@ Dark Knight // March 20, 2009 at 12:55 pm

We have your version but to comment the BU family would need to know the objective of the meeting.

The Prime Minister has gone on record in the Estimates Debate challenging the assertion by Opposition Leader Mottley that the foreign reserves fell by 400-500 million dollars. He has reported that the actual fall is 205 million. Now who is correct?

Mr. Capaldi was at pains to say that for February hotels recorded as much as 15% decline in hotel occupancy. If this is our number one foreign earner then I need not say anymore.

This unmitigated idiot Greenidge, the Barbados Tourism is n olonger based on how many people transited thru GAIA but we are couning the numbers who are staying on island nowadays so unlike that idiot Blarney he / she Lynch.

Also one would realise thatMin Sealy is a real worker and that the income earned from Tourism was the largest one ever recorded.

Royalrumble can you indulge my poor training and explain to me, how a sizeable fiscal stimulus will not not result in a significant loss of reserves in an economy like Barbados in the current global economic environment.

I dont think that the politicians realise that if we dont pull togehter that all of us will suffer in the long run.

CENTRAL BANK GOVERNOR Dr Marion Williams predicts a downturn in real economic activity
with “possible negative growth” as part
of the current global economic crisis in Barbados.

And she says 2009 will be a difficult year, “likely” with higher unemployment and a decline in the tourism and construction sectors.

In her tenth and final annual address to the Barbados Association of Insurance and Financial Advisors (BARAIFA) before her retirement, Williams recently disclosed the international prospects
for 2009 were “not exactly starry-eyed”.

__________

At the time Dark Knight was writing, this is where the Governor of the Central Bank was!

Barbadians need to be aware of the tactics of the Opposition to try to spread rumours and lies. There is a big difference between addressing the Insurance Association and addressing Clico’s Agents!

Dangerous stuff….

Barbadians would have heard the Prime Minister during his rap up speech on the second reading of the estimates debate of Friday last giving the impression that Opposition Leader Ms. Mottley and former Prime Minister Arthur were wrong in their statements that the international reserves of this country fell by $471.8 million and $718.4 million respectively. They are both correct and will now seek to show how so.

The first point that must be made is that both Ms. Mottley and Mr. Arthur drew their conclusions from page 76 of the Central Bank report under head International Reserves. As a rule international reserves here reflects the total reserves held at the Central Bank, central Government, Commercial Banks and other private holders of foreign accounts.

Ms. Mottley quoted the figures from December 2007 to December 2008. At December 2007 the reserves stood at $2,462.7 billion. By December of 2008 there had fallen to $1,990.9, a decline of $471.8 million. When you take into account that between January to March 2008 there was an increase in the reserves to the tune of $246.6 million then one can see not only how Mr. Arthur arrived at his figure but one sees a more frightening trend.

$471.8 plus $246.6 equals $718.4. That is the figure quoted by Mr. Arthur. What is most frightening about Mr. Arthur’s figure is this. At March 2008 the foreign reserves stood at $2,709.3 billion. By December 2008 their had declined to $1,990.9 a decline of $718.4 and herein lies the devil in the detail.

That for the last nine months of 2008, our international reserves fell by $718.4, suggesting that there is a downward trend which can only spell trouble for Barbados. In my opinion it is the single most credible piece of evidence that Barbados is heading for real economic disaster, reminiscence of the early 1990s and may even be worse.

Barbadians in time will come to judge if Mr. Thompson was correct in his estimation of the state of the foreign reserves when he quote only the information from the monetary authority namely the Central Bank and Central Government. He has chosen to leave out the figures from the Commercial Banks and others in spite of the fact that as the rule the international reserves are made up of the total foreign exchange being held in the system.

In December of 2007 the reserves held at the Central Bank and the Central Government combined stood at $1,548.0 billion. By December of 2008 their had declined to $1,346.2 billion. This represents a declined of $201.8 million, but note this only captures the reserves held in the Central Bank and Central Government not the total system.

The Prime has failed to provide the facts for his own statement that the reserves have not fallen but only grew at a slower pace. The fact for all to see is that our reserves are fallen at a most alarming rate at a time when all our foreign earners have decline.

hartley henry and poor-rakey “econo-miss”, here is a transcribed extract from Mr. Arthurs, Estimates speech.

This stuff is way too high for Thompson and darcy boyce. Pay attention to Mr. Arthur’s last paragraph.

Also, little wonder that Regional Heads want to reshuffle the CARICOM fortfolios because they have no-confidence in Thompson:

Former Prime Minister Arthur:

“Last year Mr. Speaker Sir, the credit creation at the Central Bank up to December rise by $225 million credit creation by the private sector increased by $503 million and total credit created was $723 million which led to a corresponding decline in the reserves.

What is the significance of the point Mr. Speaker? In the last financial year, domestic financing of the deficit $643 million only $225 million of that is yet to be shown in the decline of the reserves. So the reserves will continue to fall.

What is the important point that I am trying to bring out – that there is a fire raging in Barbados – as represented in the significant lost in our reserves caused by excessive credit creation – you had $645 million in credit creation last financial year – this House is now being asked to approve a financing programme for the next financial year where we are going to have to raise $743 million locally.

So the reserves have already started to plunge because of $225 million of credit creation – in the case of the government and $525 – up to December, it engulf further – there is a fire raging and we are asking now for $745 million to finance the deficit.

Now Sir it is as if we have a fire raging and you send a fleet from the fire service not loaded with water but loaded with high oxygen fuel.

I ask the question Sir, what are the implications for the local banking system ?

Are we in a position in Barbados to have the local banking system accommodate $745 million in credit creation? Now Sir, what are the answers to it?

That could be accommodated if there was a significant growth in deposits of the local banking system.

But it has to be an important failure of the people who have prepared these estimates and who expect the local banking system to finance them – not to recognise that for the second time in our history – deposits in the banking system of Barbados in 2008 fell.

They fell in 1991, in 2008 and they are likely to continue to fall again, because incomes are falling; private capital inflows are falling and exports are falling.

Sir we know that you cannot afford to depend on the growth in deposits to finance the deficit Sir.

Is there some other source of resources available to the banking system that they can draw on to help finance this deficit.

Yes there is another source Mr. Speaker, as we all know the banks own deposits at the central bank. What has been happening Mr. Speaker Sir with the deposits held by the banks of Barbados at the Central Bank.

Last year there were $916 million at April, they have fallen to $540 million dollars by January. So what do you have?

You have a situation where the deposits in the banking system are not growing and are falling and deposits held by the banks in Barbados, Mr. Speaker Sir – at the Central Bank – have fallen from $900 million to $540 million.

So there is simply no way that you can go to a local banking system where deposits are not growing and where they are drawing down deposits from the Central Bank and ask them to carry new credit creation of $743 million. It is scary.

And if $225 in government funding has already caused the reserves to fall by almost $800 million what pray tell me what is going to happen to us, if we now add another $743 million in local credit, to a system that cannot accommodate it.

Because if the system cannot accommodate it, it can only come from the printing of money.

Now Mr. Speaker Sir, I say the Minister of State should really come to this House and give evidence you know. “