As a research student on Caribbean Political Economy I regularly surf the net looking for relevant readings and presentations.  I recently came across an address titled “The Global Economic Crisis: the Role of the International Financial Institutions in the Caribbean” delivered in the Bahamas.  After reading the above text of the address, and reading a recent local presentation I feel compelled to share both perspectives with my fellow Barbadians.

In the Bahamas address the author in a very wide ranging assessment delivered his verdict on the current economic challenges facing the Caribbean region.  The author sets the tone for his address by identifying a trilogy of issues that combined to exert pressure on the economies of the region.  He advanced that while dealing with the adverse effect of the global and financial crisis, most of the region’s economies have also had to contend with three other sets of economic forces which have imposed on them the obligation to carry out major transformations to their economic structure at great costs, or to make major adjustments that have significantly narrowed the policy space within which they operate. The author identifies these as:

Loss of trade preferences,  which lead to a deterioration of fiscal circumstances, a substantial reduction in their foreign exchange earning capabilities, and the lost of in excess of 60,000 jobs in the OECS; Secondly, the impact of the fuel and food crises in 2007 and 2008; Thirdly the fact that the region had some counties where their debt had exceeded100% of their GDP.

The author then expressed complete agreement with Richard Bernal”s  comment, “ the Caribbean has been more profoundly and adversely affected by the global financial crisis than the developed economies and most developing countries.” The exact words of the author were “ An appreciation of the full dimensions of the crises with which the Caribbean economies has had to grapple bears out the validity of this assertion.”

The writer then pointed out the dilemma that confronted and continues to confront economic policy makers around the world.  He proffered that in these circumstances that the region would have to pursue policies to reduce expenditure, which could in turn deflate the economy. While to offset the worst effects of global recession, stimulation of the economy by fiscal and other tools was necessary.  He boldly stated that “No easy answer can or has been found to such a dilemma.”

The author highlighted the reversal in private capital flows as arguably the most significant one for the region. The Economic Commission for Latin America  and the Caribbean reported that there was a major reverse in Private Direct Investment in 2009  when the volume of FDI plunged by 42% to 5.7 billion after a virtual  200 percent increase between 2006 -2008 rising from US $5.9 billion to 10 billion. The author referred to the Caribbean Development‘s Annual Report 2009  which reported  similar reverse trends in remittances… Tourism also came under microscope as the annual growth was recorded at 7 %  between 2000 and 2007.  However, the region was reported as seeing a fall off in receipts in recent times. The author also pointed out that the offshore sector, bauxite and alumina industry were also experiencing “ sharp contraction.”

The conclusion drawn from the above inputs according to the author was that this reversal in FDI flows, reduced remittances, decrease receipts from exports led to a scenario where regional economy was “effectively destabilized.” In his conclusion he acknowledges that the region did not cause the global crises but “suffered severely” from the consequences.

In the local presentation, the newly appointed Opposition Leader sought to zero in on what he describes as “catastrophic situation in Barbados created by the DLP administration.  As a matter of fact on page 19 of his presentation “We have a lot of Work to Do” the new opposition leader states that if Barbados is “ to come to terms in earnest to deal with the present economic crises, then the time has come for the DLP…to stop ascribing the woes experienced in Barbados to the impact of the global recession.

Readers let me come clean. The new opposition leader and the author referred to at the start of this article are one and the same. Can you believe that? In his incarnation as a highly paid regional consultant on economic matters, he attributes the problems in Caribbean economies, of which I suppose Barbados is one, to the impact of a series of global crises to which there was no easy answer. He used terms like “ significantly narrowed the policy space within which to operate,  loss in trade preferences … On set of 2008 crises …resulted in a permanent loss of between 1% -2% of GDP,, substantial fall in Foreign Exchange earnings between 2008 -2009.

However, in his incarnation as Opposition leader he is a reborn economist who has flipped a coin that does not land on heads or tails.  He now assigns the problems of the Barbados economy to the policies of the current administration.  So according to him we are to believe that the declines in tourist arrivals and expenditure and the fall off in the offshore sector, and the consequent slow- down in economic activity and reduction in government revenues are unique to Barbados and caused by the actions of the current administration.

A government seeking to keep people employed in such an environment is surely going to run a larger deficit.  Would the new opposition leader have preferred salary cuts or layoffs instead?  But its up to the reader to decide who is the dispassionate economist or the power hungry politician playing with words and perceived expertise to score narrow political gains, or satisfy his lust for power.  Please read this again.  We going with Owen the politician OR Arthur the regional economic consultant?