Long before the global financial crisis stunned the world, the BU family had expressed concern about the need to restructure the Barbados economy. Many blogs were posted which discussed the need to rollout alternative energy initiatives, to examine the system of education which was and is not producing graduates with the skill-sets to make Barbados competitive in the global economy, make our civil service more efficient by holding it more accountable, the need for Barbadians to participate more fully in our democracy, pressure our lawmakers to make laws which encourage ethical behaviour among many other concerns.
The prevailing global crisis has exposed the underbelly of our small and open economy, more so the false sense of security which the boom period created. We accept that the pressure of external shocks will always rock our boat, but that knowledge should have informed strategies and policies which demanded we provided for the barren times. Even with our debt to GDP ratio alarmingly high, reducing foreign reserves, rising unemployment our politicians and people continue to debate the issues along party lines.
Tomorrow we understand a public and private sector consultation on economic and related matters will take place at the Lloyd Erskine Sandiford Centre from 9AM to 5PM (to be broadcast live on CBC TV). The government’s Medium-Term Fiscal Strategy (MTFS) will no doubt be placed under scrutiny. Up to now there has been heavy debate on whether Prime Minister Thompson’s wait and see conservative approach is the correct one. The Prime Minister has been very reluctant to support more aggressive stimuli initiatives because of our high level of importation which would place pressure on our foreign reserves.
Key to the global economic recovery is the US economy. It is the world’s largest economy and one of the top three tourist markets for Barbados. In recent weeks the rest of the world would have been emboldened by the financial analysts in G7 countries and international financial agencies who have been suggesting that the economic trend in the US economy is bending upwards. Last week Former Federal Reserve Chairman Alan Greenspan threw a spanner in the works by suggesting the U.S. economic recovery was “extremely unbalanced,” driven largely by high earners benefiting from recovering stock markets and large corporations. He went on to issue the bold statement that the current financial is by far the greatest financial crisis, globally, ever” — including the 1930s Great Depression. Greenspan was Fed Chairman from 1987 to 2006 and should be given credit for understanding the US economy.
The discussion at the Lloyd Erskine Sandiford Centre tomorrow should be interesting. Will our captains of industry and public sector officials recognize that these are extraordinary times which call for extraordinary solutions, or will we have yet another talk shop? Despite the dark economic clouds which loom on the horizon Barbadians seem not to have connected to the gravity of the situation confronting the nation. Some BU family members have already suggested that as a country and a people we will have to indulge in a fiscal and monetary discipline the likes we have never done before. Can we do it?
What is not in dispute is the recovery of the Barbados recovery is entwined with the fortune of the US economy. If Greenpan’s prediction rings true and the US economy goes W, the welcoming arms of the International Monetary Fund maybe unavoidable.
The daunting task for the government is how does it exercise fiscal and monetary discipline which must be managed by the entrenched army of occupation who is guarded by the unions still steeped in 19th century approaches.
The blogmaster invites you to join the discussion.