Notes From A Native Son –The State Of The Barbados Economy, The Competence Of The Government, And Its Ratings By International Rating Agencies

Hal Austin

Financial and academic economists are rushing out oaf the woodwork to take sides in the continuing debate about the state of the Barbados economy, the competence of the government, and its ratings by the international rating agencies. What is clear, however, is that the people who matter – the taxpayers – are not getting a true picture of the state of the economy.

Two of those who have taken opposing views on the Moody’s downgrade are Professors Michael Howard, broadly in agreement, and Avinash Persaud, who is opposed. If Professor Persaud’s outburst, as reported on Barbados Today Online (15/6/11) is accurate, he is simply wrong in suggesting that the Moody’s downgrade was ‘an irresponsible rush to judgement.’ Where is the evidence?

What should they have waited for, more soothing words from the minister of finance and his backers, asking citizens to accept in good faith that the economy is in good shape, but not providing any sound evidence to back it up. Professor Persaud, a member of the prestigious National Council of Economic Advisors, is either speaking as an objective economist or as an economic advisor to the government, an insider. He has to make clear his position. He is reported as saying: “I have no doubt that Barbados will repay its debts and so I believe the decision of Moody’s is an irresponsible rush to judgement, especially given the recent decision of Standards & Poor’s to hold our credit rating steady.” Where is the beef? If Moody’s is rushing to judgement, then where is the counter evidence, the facts to substantiate Professor Persaud’s apparent position that Barbados would repay its debts?  Does he know something that the rest of us do not?

The other expert dragged in to the discussion was Professor Justin Robinson, who heads the school of management at Cave Hill. In a statement of fact, he pointed out that if the rating given by the credit rating agency meant that if Barbados was at an investment level, then the market would decide whether or not to buy Barbadian bonds or make loans to the government. Nothing wrong with this. But remember this is the Professor Robinson who is (or was) a senior member of the board of the national insurance scheme who was asked by the late prime minister David Thompson  to reply to a valid criticism I had made of the NIS and whose considered reply could be summed up simply as waffle.

Moving on, let us take some of the obvious and most urgent questions: what is the true extent of the current account deficit? Let me explain: despite all the technical jargon by people with an alphabet soup of letters behind their names, the answer is simple: if Barbados imports more than it exports, if it spends more than it earns, it is in deficit; if it spend less than it earns, then it is in surplus.

Why cannot our leading economic spokespeople, especially those who appear, to my mind, to be apologists for the inept way the economy is managed, explain this and give a roadmap for reducing it? Let is also look at the fiscal deficit: governments do not work and earn money; what they spend they raise in taxation such as income tax and sales (VAT) tax. Liberal democratic governments tend to spend more than they earn, stretching the payment over a given period (the length of a parliament) or even across generations.

The decision to spend is based on economic, social and political  beliefs. For example, Sir Grantley Adams’ government believed that a modern Deep Water Harbour would bring such economic benefits to Barbados that the decision to borrow the money and stretch repayments over generations would benefit all Barbadians.

What is important is the percentage rate at which that money is borrowed. If government raids the national insurance account as its own piggy bank, which they all tend to do, then the money comes at a virtual nil rate; if they borrow from local banks, then the rate can be negotiated down. The going rate is 15 per cent, according to the Ministry of Finance, which is huge.

On the other hand, government can issue bonds (also called gilts or Treasuries in the US), in which investors ‘loan’ money to government (or big corporations) on  a promise to pay in a future date at an agreed rate. In exchange for this, the investor will be given an interest rate, sometimes called a coupon or income, and at a pre-determined time the full amount will be paid back, this is a contractual obligation.

Bonds are an efficient way for government to raise cash and can be very efficient also for some corporations, such as life insurance companies and other annuity providers. So, if a pension provider knows that in ten years’ time X number of new pensioners will be coming on stream, they can guarantee that money by taking out a government bond, hoping the money will be paid in full on the appointed day.

This is where the international credit rating agencies come in. Remember that these are the same agencies that gave top investment-grade ratings to the main players, such as Lehman Brothers, who caused the 2007/8 global financial crisis. They are not perfect. However, at the top of the tree in terms of these ratings is the US dollar, on the assumption the US government will never default on payments, as the Argentinians have done. Of course, we now know that the US economy is on a cliff and if Congress fails to agree a measure by August 3, then the world will be plunged in to further economic disaster.

So, a country which gets a low rating from these agencies (S&P, Moody’s and Fitch are the three leading ones), could still get a loan on the international capital markets. But the rate will be massive – instead of base rate plus three or four per cent, it would be in double digits (as it is now for Barbados).

Let us now look at the key drivers of the economy. There are three key drivers: consumers, corporations and government. Ideally, an economy driven by consumer demand is in a good place. It means firms providing goods and services are making money, therefore they can upgrade their plant and hire additional staff; government would also get more income and sales tax, along with additional revenue from land tax, stamp duty etc.

The important thing here is the rhythm of the business cycle. If disposable income drops for whatever reason, say inflation, then consumers have less to spend, shops and trades people have less work, and government revenue is similarly reduced.

To stimulate the economy, government may ‘invest’ more in public works to keep people in work, hoping that they would go out and spend. (So, already you see a contradiction in liberal democratic macroeconomics: the desire for people to save more for the long term, while at the same time hoping they would spend more to keep the economy working).

Let is assume that government has borrowed $400m at 15 per cent, which means that it has to repay that money in an agreed time, or face penalties, plus an additional £60m in interest rates. In a small economy that $60m can fund any number of projects, so a political – not economic – decision must be made whether or not to go ahead with the loan.

Barbados has lots of deep structural problems: the long-term unemployed, who are in reality unemployable; a lack of funding for small businesses due to foreign-owned banks not lending and government not having the guts to turn the eighteen post offices in to conventional retail banks, offering a basic balance sheet service; the meltdown in the school system and its high failure rate; the social housing mess; the health care system; the crisis in the civil and criminal courts; civil servants squatting at their seats with a productivity rate of near zero; a massive public payroll for inefficient and unprofitable agencies, such as the Transport Board; the list is endless.

All this is topped by a government going cap in hand to the Chinese begging them for crumbs to repair an old cinema and to help set up a small business funding scheme. How embarrassing. Presumably this is an idea that came from the National Council of Economic Advisors.

The Barbados government and the central bank, and now the National Council of Economic Advisors, have a lot of explaining to do about the state of the economy, until then Moody’s are right and the ungrounded optimism of S&P is wide of the mark. In the final analysis, we all wish Barbados well and badly want the nation to progress, but don’t try to pull wool over our eyes.

59 thoughts on “Notes From A Native Son –The State Of The Barbados Economy, The Competence Of The Government, And Its Ratings By International Rating Agencies

  1. An excellent summary of the position.
    When will we get the roadmap for deficit reduction – or is there no political party which is brave enough to do it?
    Will we just wait until we need IMF support, then blame them for what has to be done?

  2. Absolute Rubbish. Where has Mr. Austin been living…..on Mars? where has he heard the Minister of Finance telloing anybody in Barbados that the economy is in fine shape. As far as I recall everu since Mr. Sinckler became MOF he has repeated the same speech over and over again indicating that the government has serious issues in the public finances and that the deficit in government had to be tackled assiduously. He did it in his Budget last year and again in his estimates presentation. Where have you been living? In fact I seem to recall that last week while touring the Finanacial Services Commission HQ he said it again when questioned for a lehgthy time by members of the media, just as he did when he went on both VOB and CBC for more than 2 hours. He also made the same point in an interview with Sanka Price from the nation when asked why he could not ease taxes on the people of barbados.

    So what is Mr. Austin’s point. The problem with some people in Barbados is that they hear but they don’t listen. Everybody in Barbados should know by now that the Barbados economy is not in good shape. That is obvious. That is why the Minister had to introduce additional measures last year which the opposition opposed. In fact it leaves me to wonder exactly what would have happened if those measures were not introduced.

    But people like Mr. Austin and his friend Owen Arthur believe that all Bajans have short memories. I don’t. Indeed I distinctly remember Arthur telling the current MOF in the budget that he should ignore the same ratings agencies that he seems so enamoured with today. In fact he boasted how he used to ignore them and the IMF and implement his own policies and Sinckler should do the same. All of a sudden he now recognize they is an agency called Moody’s. A very discredited bunch by the way that did not have the guts of fortitude to down grade some of the investment banks in the US and Europe when it mattered most and caused us all to be in the shit we are in now.

    You could fool yourself about what is going in Barbados but I am not. They made be some signs of recovery but we are definitely still in the woods with a long way to go. But to come to suggest that all is hell in Barbados and this is the end of civilization in the country as we know it is reckless and irrespponsible and serves no other purpose than to destablize the economy and the government. It is pure politicking plain and simple. Arthur has no particular love for Barbadians he is motivated by one thing and one thing alone and that is to get back in the PM’s office to wield power and lord over people while exacting revenge on those he feels turn their backs on the BLP. Nothing motivates him more.

    So if you Mr. Austin of short memory, has forgotten what he gives we in Barbados have not. We have not forgotten the 200 million odd wasted on GEMs, the near 25 million stolen form Hardwood; the 300 million odd spent on the 30 million dollar a year prison; the 250 million odd spent on the highway; the 50 million wasted on the coast guard station which now has to be build over; the near 100 million spent on the Barack building in warrens and with 70 million odd still owed by government to Barrack when he Arthur could have accepted 25 million and settled that case; the 13 million dollars he allowed david shorey to rake in when he as minister of town planning change the land at holders from zone 1 to zone 2 and give building permission to shorey after denying old man babb the same permission.

    You Mr. Austin really serious about who got Barbados in the mess it in now? oh and while yuh at it ask yuh friend after to where he do with the cheque for the 50,000 he get from CCB (clico) that he claim was for the labour party by somehow find it way in his bank account.

    Wunnah really feel people forget wunnuh nuh. But sorry all the people that know wunnuh ent dead yet. Bring ion the election BU

  3. People still playing politics with this debt thing. I aint paying Hal Austin nor Owen Arthur nuh mind. As for Owen, if anyone is leaping bout in de dark it his him and his power hungry cohorts; jumping from created problem tuh problem. I have chronicle of all his positions on the economy since this government took over and it paints a “tale” of man playing pure politics.

    However I am willing to take moody’s position as the gospel truth, and Bajans should. A lot of good can come about from reduce borrowing and spending. I know many think it is fools play to equate personal finance with that of a sovereign state, nevertheless I will continue to do so. There was a time that unchecked spending put me in a bind where I could barely afford to make the monthly payments. This lead to a series of defaults and a negative credit score and history. As a result of being force to live within my means my credit rating is now in the coveted 800+ range along with 5% of americans. Needless to say I have investment firms running me down with their offers on credit, which I don’t need.

    • Agree with Adrian, in the same way as individuals we have to make adjustments to how we spend our personal monies whether consumptive or in investment, the same holds true at the national level.

      How can we have an economy which depends heavily on tourism and FDI (the selling of land) and where our source markets are sluggish and expect business as usual?

      More important, our lifestyle has always bee inflated, supported by construction activity and other unsustainable engines in the economy.

      We need to adjust our lifestyles and wheel and come again.

      Where is the leadership!

  4. Why would a man who has been a journalist for many years be so thin skinned to include the information that Prof J Robinson once criticized him on an unrelated matter?

    Why did he describe Persaud’s objection as an “outburst”?

    Seems like a man out to settle some scores.

    BTW the article contained some useful nuggets but I would have been more impressed if Austin had declared that he was also “taking sides” along with the other “Financial and Academic Economists”..

  5. @Adrian Hinds

    This is a case of dueling Rating Agencies, some people will line up behind one or the other according to their political leanings.

    Is the glass half empty or half full?

  6. Saying you find Moody’s opinion unsupported by evidence is not the same thing as saying that you think things are fine in the economy.

    By giving the same rating to the local and US dollar debt Moody’s is in effect suggesting that Barbados is equally likely to defualt on US and Barbados dollar debt. That position needs some elaboration by Moody’s.

    The statement also suggests that there is a major tighening of local credit conditions in terms of the government’s ability to borrow. That does not square with the fact that government debt issues year to date have been oversubscribed.

    The fiscal deficit is clearly too high and current global economic conditions suggest that growth is unlikely to solve the problem. Corrective measures were taken in the last budget, and the available evidence suggests they have helped somewhat, but its an open debate on whether or not further measures will be needed.

  7. When it’s all said and done loan, or grant from the Chinese is something that the politicians of Barbados need to pay attention to before things gets out of hand;
    Less spending needless money on things they think that’s best for the people of Barbados; **I DO NOT TRUST THE CHINESE PERIOD**; They aren’t people to be taken lightly when it comes to getting what they want; They have loan South Africa plenty of money. But in return they are taking roots in South Africa. But the are limiting the number of South Africans that can enter into China; These people are all about business. At the end of the day, they get what they want at whatever price, or by whatever means necessary. Barbados is only but so big, and to have them take root in Barbados, even the thought scares me;

  8. @Kat Wilson-jones

    I support eveything you said. owen is interested in power to exact revenge and promote his friends and place them in position to enrich themselves. He is reponsible to some extent for the state of the economy, becasue of his reckless spending and wastage on projects.

    By the way, you have forgotten the project at the top of newton, now occupied by gilden. i cant remember how must money was wasted, but i am sure you can get the figures also for greenland.

    I am satisfied with how the economy is bing managed, look at the problems of greec and porttugal. If people will take off their politcal blinkers sometimes and let us look at the way forward we will progress, but people think that Aurthur has the interest of barbadians at heart, but his interest is the business community and the largesse that is thereby associated.

    • What has happened with our oil ambitions with rising oil prices we may make a penny or two. This government seems on autopilot. Is George Hutton still a minister?

  9. I would have to say absolute rubbish. Yes the fiscal deficit in Barbados is higher than where you would want it to be. But we understand the reason for that. It was outlined in the goverment’s fiscal strategy that in order to stabilise the economy the government would have to increase its expenses. So the deficit was projected to increase and it did. The strategy also made provision for the deficit to declined and for the government to have a balanced budget by 2015.

    How many of you did not noticed that the fiscal deficit decreased from -9.4 percent in 2009 to – 7.4 percent at the end of 2010. Barbados was one of the few countries within the region to achieve should a large reduction in the fiscal deficit. Does this sound like an economy which is running astray or an economy which running on course.

    It is high time that we have a bit more confidence in what is being done here in Barbados to stabilise our economy. International firms such as Moody’s, Standard and Poors and the IMF have a very rigid view of economics. Throughout the European Union they engaged in a number of severe austerity measures to drastically reduce their deficits. What good has it done for them. Hardly any change in Portugal or Greece. What good did it do. Many of the persons their are suffering. They failed to recognised the social impact and just looked at the measure in terms of finances.

    If we were to take the drastic steps what would that do to our society.

    I think it is high time that we work to promote the interest of Barbados. Spread the message that the economy of Barbados is doing comparatively well in this tough situation. It would work out to our benefit. The reality is, that we have done better than most. We should be thankful for where we are and stay focused.

    What is obvious is that through out this economic crisis some people only saw the election. They did not look at it in terms of restructuring an economy which can stand on its own two feet. Wrap yourself in the flag and work towards that.

  10. Pingback: Moody’s, Standard & Poors and the State of the Economy – Have your say! – Young Dems - Youth in Politics

  11. Pure politics in play here. If the market is demanding 15% interest then that informs us all about the critical perception of Bim’s financial state. Blaming Moody’s for the World’s financial ills is ridiculous. Yes they contributed because some people believe that they are independent BUT Moody’s is far from the epicentre of guilt. The real problem is greedy, crooked, liars in politics and business regardless of political stripe. They dont intend to tell the people the truth or indeed to ever seek truth themselves. Let’s build some edifice at great expense, like Kensington, to show the people how great we pols are. Naturally it is an opportunity to thief plenty money. Was their a comprehensive plan to use Kensington, collect rent consistently? The pols lead peeps to think that credit abuse is OK BUT more than 2000 yrs ago, a gent named Joseph interpreted a dream which should never be forgotten, store your gains in the 7 fat yrs so that you can survive the 7 lean yrs. That has served me very well during my adult life and will serve every person and politician.

  12. What is the motive for the Dems wanting to stay in power, and where do we cull these assessments? Someone asked the question How do you explain that the debt minus the 1.5b during Arthur’s time was horrible, reckless, and today you want to say it is alright and manageable, millions and millios of dollars later. They pointed out that Barbaods never reached this status under Arthur, and now theDems have taken us where no one has gone before. But it is Arthur’s fault. Wunnah ignorant. Yuh can’t take me for a ride that easy. It is insulting when people who should know better try to fudge facts to fit an opinion. I checked for myself because you really cannot trust people or media today. I listened to Early Business, coud not believe my ears. Either people do not check facts before speaking or they have an agenda to push. They gave the impression that Moody’s have one opinion and Standard and Poors another, which one is more reliable? What are the facts? Moody did their study and released in June. Standard and Poors maintained their level and gave projections since March. Both agencies AGREE, OUR INVESTMENT RATING IS THE LOWEST LEVEL GRADE BEFORE JUNK. No difference there as far as my reading showed me. Who rated us first Standard and Poors. All Moody is saying they agree with Standard and Poors but they assess that current conditions regarding oil prices, deficit, economic recovery worldwide that Barbados situation will worsen. The difference then has to do with the timing of the assessment, Standard and Poors at a time of more favourable int’l conditions, earlier this year, Moody later when conditions deteriorated. Media trying to portray Standard’s report as if it is a fresh one done this month and it was not. They should be shame. What the hell is the fuss, one right and one wrong which I never expected to hear from Early Business. Brass tacks today someobody call in and ask for clarification about who assessed first and the moderator sat dumb never gave the correction. He must know by now, he works in the newsroom. Can’t trust nobody nowadays.

  13. Kate Wilson-jones

    I support you 100%.

    Everything you wrote makes absolute sense.

    Owen”seethru”Arthur and his friend Hal Austin are living in la la land. They don’t have a clue what is going on.

    @ Kate Wilson-Jones
    @ Hal Austin
    It seems that Kate Wilson-Jones and Hal Austin are grinding axes. Unfortunately somewhere in the middle are the Bajan people. It is noteworthy that Kate Wilson-Jones did not argue with what appears to be Hal’s excellent, though unfortunate, analysis of the Nation’s state of affairs. Her own robust response is equally elucidating and very damning of the opposition’s time in office and their responsibility for the present economic malaise.

    Sounds like Election fever, I me fervour, is a’present in Barbados. Pity it’s not possible to have a hung-parliament and a coalition Government…for therein, it seem to me, the people of Barbados would more likely benefit.

    The Nation’s concern should not only be (or even principally) be about the economy. There are moral, social, and spiritual issues that should be in the forefront of the debate. The decline in major Western Economies like North America and Europe came’ not due to lack of money but an excess of money and more princely, a mismanagement and misappropriation of that money.

    With the abundance of money came the decline in moral values; people sought security in MATERIAL THINGS to substitute the spiritual and emotion balance lost. Morality became Money, Ethics became Economics and Community became Commerce. The ‘land’ was sold-off to the rich and novo-rich who gain possession of land that would otherwise house seven families…hence marginalising the community.
    The economic decline is comparable to the world-wide moral decline. Much of people morals were purchased with money that were in the hands of the perverted-rich-and-the-morally decadent who deny the people wealth that were appropriately theirs; impoverishing them to the extent that that they would sell their morals to pleasure the insatiable lust of the avaricious.

    PLEASURE is an expensive commodity…in monetary terms and moral terms. Sex, drugs, alcohol and opulence are the essence of pleasure and are the only commodities that are, unfortunately, abundant and tradable at all classes. There is where the ‘missing’ wealth of the world gone…into the bottomless, gluttonous pit of immorality. Where else?

    Excessive opulence, excessive alcohol consumption, drug taking and binging ere the prevalent past-time of the 20% (or so) who have access to the perverted money and indulging in excessive pleasures (without joy)

    The Government have to stem the flood of nasty money that is flowing from corrupt immoral sectors into the communities like nasty sewage corrupting the youths and the decent……money made filthy by the unwholesome and insatiable appetite of the immoral who are rich in the flesh but impoverished in the spirit.

    A healthy and wholesome vision is needed for our young people… (For it is said that the future of a nation is in the spirit and hands of the young) There are too many bad examples abound out-there for the youths. 50c the mega famous rapper (The onetime vice prince) who started his career as a drug dealer – who boasted victims and is renowned for surviving several gunshots wounds – was recently ‘iconalized’ with the prestigious privilege to speak on economics at the prestigious Oxford University …. If, a recent report from the European Parliament stating, “…more black youths in Britain go to prisons than go to university…” I would find it laughable but the matter is too serious to laugh at.

    JZ, Jah Rule and many other mega famous ‘rappers’ were fast tract (by the mass media) from ghetto-violence and vice to fame and fortune; sadly as an example of where many of our young people must start their career but most unfortunately where one of a million succeeds; leaving the others to destroy lives and spend the rest of their lives as recidivists in and out of prisons.

    (Seem that what we once considered as the ‘worse’ amongst us are now recognised and celebrated as the excellent and successful. IS SOMEBODY PLAYING GAMES WITH OUR YOUTHS?)

    Our politicians need to WAKE-UP and look at the whole picture and put the people FIRST and party-politics second.

    In places like Banda Aceh where governments were corrupted by money; pervertedly rich and morally decadent people were able to travel there like pilgrimage to porn and destroy the minds of the young and innocent – even the police, the protectors of the vulnerable, were brothels owners selling children in the paedophile sex-trade. As there were no Earthly vicegerent to protect these children
    The mighty hands of the Divine justice came and washed the filth from the communities into sea. (Respect to the dead acknowledged)

    Barbados is not near such a state but if you are on a journey. the place you haven’t reach, you haven’t past. So please politicians and pundits balance the books and let us have some good-old-time Principles as well as your economics.

  15. The only way or should I say the best way to get Barbados out of this mess and avoid a devaluation of our money is for our leading gurus to put aside politics and show some maturity, put your heads together and look for a way out . Our situation will not remain constant, we can either rise or fall, it is up to them to be patriotic, so your worth as educationed, Babadians or regionalists and charter a way forward.

  16. See what happens when a party wins a government by deceiving the masses with all kinds of gimmicks but did not have persons of intellect to actually run the country. The government’s problem is that they are not listening to the civil servants who know what to do, they are “knowitalls” and hence the problem.

    My heart bleeds for my country. I do hope the Dems will listen now to those who know and try to turn around this country, it is all we have, B or D or N.

  17. Sorry to disabuse you scout, but our money is already devaluing, hence the increase in food, fuel and all other prices.
    Unless you are pegged to the Swiss franc you are on the roller coaster and you are helplessly going down.
    It may have been an exciting ride , but in the end, you end up where you started having paid your money and gained nothing except the thrill of say, first world status.

    In my mind, given current world affairs, I am at a loss to see what Barbados has to offer in solving global problems.
    Our government seems even impotent in fulfilling the manifesto it was elected upon.

    It is only a matter of time that the $US loses it’s reserve currency status, and from my standpoint China has grown too quickly too soon to adequately meet its people’s growth aspirations.
    The current inflation will be the short term death of their remarkable experiment. hopefully not causing the civil unrest that the US must face when reality strikes
    As for Barbados, does the world care? do they fuck.
    Instead of toeing the current expediency line, our highly educated advisors should be pointing us toward a path of survival, rather than this insanely arrogant drift into penury,

  18. @Ryan

    Your contribution was well reasoned, clearly Hal Austin has not taught me anything,, except to show his true colours.

    If the world is still in recession, do we expect major increase in tourism revenue, one of the planks of our economy. In recession, people do not spend as freely and invest as widely as they normally would, therefore the FDI will be impacted as well. Confidence in the world order and the local order is what drive FDI investment.. Please note that I am not an economist, but i think that i understand development issues.

    agriculture and industrial output havebeen in decline for ions, we are getting less and less for sugar, internataion buiness is being impacted by the majpr players who are pressuring us, therefore we have not seen the growth in IBC. Sould govt bring its capital works to a halt and what impact would that have on the economy?,

    @Hal Austin

    Compare barbados’ performance with greece, Portugal, how have we performed in mangaing the crisis, including out debt, our employment and our social services? Dont you think those of us who can afford to make the sacrifice should do so for the good of the country? do you recall sandiford refusing to cow tow to the imf and he putting his own policies in place and which is now used as a model and this has given developing countries the courage to stand up to the imf.

    The Minister of health introduced some necessary reforms in the health sector and before people get the facts they were ready to crucify him and at the town hall meeting the misinformation has been cleard up. A lot of you all would say do this and do that and when there is an attempt to have optimun return on investment, the yard turkeys start keepin the most noise. Transport has allways been a problem, your administration did not have the forttude to support wood when he was increasing bus fare, this administration had to do so and it would look like the govt impsoe an increase on people when it should have been done by your administration long ago. The same goes for water rate, we had people shouting, but walking about with imported water at almost $2 a pint, but dont want to pay for our local water.

    Hal please go and come again. thank you.

  19. Wow we are comparing Barbados to the countries known as the PIIGS, that’s like boasting about not coming last in the the class for retards.

  20. @AOD
    PIGS (Portugal, Ireland, Greece, Spain.) You mean it like saying Barbados is in a higher class of losers

  21. @AOD

    Regradless of the size of an economy or business, there are certain bench mark to detrmne growth or stagnation, So you go and come again and add something useful to the dabate. if you dont have the ability to do so, you should not get intot big people’s business for you might get squeeze.

  22. Now that we are bent out of shape about what the international rating agencies are saying, here is what the IMF is saying about two of our key source markets.

  23. to kate wilson- all governments take over debt when they assume office. the level of debt ought to reflect the level of social and physical development. we in barbados have been boasting about our level of development with regard to size, limited resources etc when compared to our lesser developed sister islands as well as sister islands and countriess larger than us with more resources. what we seem to forget that our development since 1963 has been supported by lay-away-plan, borrow to enjoy life now or keep the business afloat and pay later and the cycle continues; kind of model patterned along the lines of the old time bajan shopkeeper.consequently, this business model called for exemplary financial management of all the key components to keep the business not out of the red but manageable and sustainable .fortunately, until 1991 and again now we have had economic managers who knew what they were doing and we were able to wesather the pitfalls of such a volatile business arrangement without undue harm to the country.the point i am making is that all govvt’s incur debt and moaning and groaning about t the debt incurred by the blp does not negate the fact that unbiased informed opinion places the precarious state of the economy at the present time squarely on the incompetence of the present administration. to provide some balance, let me apprise you of some of the debt fostered on the country over the years and i would not accuse the dlp of squandermania but feel that they were acting in good faith but that things just did not work out.
    1987-89 lost of $65million on caricargo
    $7million aircraft sold for $400.000
    sherbourne conference centre slated to cost $11.million standing at 40million and still incomplete
    gantry crane at port inactive for five years at a lost of $4000 per week
    Highway 2a awarded to highest bidder; 1.5 million more paid out by government- shades of bolt
    st joseph hospital-$3million more than recommended.then spent $8million more on it paying wages but having no patients
    harrison building- $8milllion to purchase and $1.5 million to demolish
    5 luxury coaches-$1.5 million
    $33million to top civil servants
    $120million loan-13%over 25 year period translates into $400million ; shades of bolt
    so you see kate, when a govt assumes office,it is expected to make wrong things right not worse. reflecting on the misdemeanous of the past does not give it a license to maintain the staus quo.


    for our people

    Hal Austin is cleaver man but he is crafty…the deep structural problem Barbados has did not appear yesterday. The BLP had a lengthy time at the helm and must accept some responsibility for those “deep structural problems.” It is petty talk to berate the government about “…going to the Chinese with cap in hand…begging them for crumbs” Wasn’t it not the BLP who proudly presented the (very) Chinese with some lucrative contracts to construct projects that was not of any urgent requirement…don’t they now wish they were more foresighted?

    As for the IMF, the IMF is a fraud (International Monetary Frauds.) Woe betide us if we have to get in bed with those fraudsters. There are like loan-sharks when dealing with our region. (Look at Guyana) They take stewardship of your economy, run the country (or shouldn’t that be ruin) take your social standards down a few pegs below what it is at point of entry.

    The IMF is like Intensive care Units (or Intensive therapy Unit) in hospitals…the difference is… hardly any of their patients recover….and there’s always good business in human organs (pardon the cynicism)

    The standard of life in Barbados is higher than most European country and to them that would be ‘a contradiction’ in-terms. The austerity measures which they usually require you to adopt are usually ‘crippling’. They determine how your affairs is run …how much you spend on what – and education is most likely to be their first suffer even thought it can do with a financial jab at present but the point [would] be Barbadians are more educated than most. I don’t think they would trouble imports (where we could do with some trimmings) because it has always been the case that ‘the big fish feed on the smaller fish’

    All being said it seems that our Barbadians ‘dreams’ have taken us above our means and at the end of the day, it going to be greater taxation, lower wages and more hardship.

    So hold on steady,
    trouble in the Caribbean Sea;
    the Good- Ship-Barbados is rocking unsteadily

    But have no fear,
    we will fare
    and live to see a better day.

  25. If Barbados’ experience was similar or even close to that of the PIGS our economy would now be extinct, so I really don’t get the comparison. Somebody enlighten me.

  26. @ Enuff

    Enuff it is about your measuring stick tell me which one you are using and I will try to answer your question. Remember, it’s about RELATIVITY

    Anyway I will assume I understand your question and try to answer. It’s like this: There are two bellies to feed…one a baby and the other an adult; both are going to require a full belly to stem their hunger but one requires more potion of food than the other to be satisfied. perhaps your question is more sophisticated than my understanding and therefore this answer would not suffice. However if I assume you are Ossie Moore then you are seeing it fron the other way ’round e.g. PIGS having to survive on the food of the Piglets. There’s nothing to suggest that you are an Ossie Moore so I most probably am.

  27. A batsman plays across the line, gets hit, one umpire sends him. Another umpire looking at the same incident decides to give the batsman the benefit of the doubt. Who is wrong or who is right? We have no hawk-eye in economic matters only time will tell.

    Importantly, however, the batsman did play across, which he should not do. The fiscal deficit is too high, and urgent effort is needed to bring it down. Barbados has been playing across the line in terms of the size of government and levels of debt for a while. This deep and prolonged recession has exposed that aspect of our technique. Old habits are hard to undo, but getting the size of government to sustainable levels should become a national priority. Selected divestment of aspects of government, while exploring new areas of growth like alternative energy seems like good places to start.

    I know I am going to get some blows for this one. But as I have been following the discussion, I feel obliged to say that if we are getting into the business of international comparisons we should note that Barbados now has the same credit rating as Brazil. Maybe we all need to be more sophisticated in our reading of credit ratings rather than using them to support our own agendas.

  28. Good analogy Dr. Robinson which can be extended.

    If the batsman is the Captain of the team who hit across the line, he would have set a bad example for his charges. The Prime Minister by maintaining a bloated cabinet + parliamentary secretaries in austere times maybe described by some to be ‘hitting’ across the line.

  29. David
    I think that the Prime Minister should have shown more strength and cut his cabinet numbers which would have been received very positively by the public. Talk about perception.
    It seems that he is fighting for his survival by trying not to offend.
    He should have kept out Denis Lowe on the pretext that he is giving him time to recover fully from his illness .It seems that persons have too many files on him. Remove Jepter Ince and Harry Husbands. He could have then brought Patrick Todd into his ministry to help with urban because it looks like Todd gine thru the eddoes at the next election and both of those constituencies really need some work.

  30. The Prime Minister is not really the Prime Minister
    Freundel aint saying a ping nor pang

    He should have gone back to the electorate and seek a mandate.
    He should have reshuffle the Cabinet
    He should have fire one or two ministers
    He should have trim the cabinet
    He should have given a proper interview to the pres corps

    These are things that Prime Ministers do
    He did not do them
    Therefore he is not a Prime Minister
    ( Roach’s Logic)

  31. Well Tina
    Your logic is faulty. He is the Prime Minister and Owen Arthur is the opposition leader although the media still believes that Mia is the opposition leader because when Arthur gives a statement on anything they then call Mia for her statement.

  32. Some excerpts from The Economist re: PIGS

    With hindsight, it was no surprise that the debt crisis started in Greece, which failed to join the euro area when it was set up in 1999 because it did not meet the economic or fiscal criteria for membership. Revisions to its budgetary figures showed that it shouldn’t have been allowed in when it did join, in 2001. When its debt crisis flared up last year European leaders hoped to contain it at the Greek border, providing a bail-out worth €110 billion ($158 billion) over three years, of which €80 billion came from other euro-area members and €30 billion from the IMF.

    Any hope of containment was shattered when Ireland’s banking difficulties forced a second rescue last November. After that a third bail-out became inevitable, for Portugal, as the cost of its government borrowing shot up and Portuguese banks were shut off from normal funding, coming to rely on the European Central Bank (ECB), based in Frankfurt. What caused consternation was a new shock—from Greece, again—that the first package was insufficient and that the country needed more money for longer.

    Credit markets paid no heed to the risks that were building up from sustained big current-account deficits, which would have caused alarm in emerging economies. They smiled on Ireland’s property boom, overlooked Portugal’s slack growth and forgave Greece its poor public finances. Spain also benefited from dirt-cheap money even though it shared many of the same weaknesses, notably a housing-market bubble and a huge current-account deficit.

    Ireland had what looked like impeccable public finances, with government debt as low as 25% of GDP in 2007, but these were flattered by swollen property-market taxes and then swamped by the costs of propping up banks that had gone on a bender, the bill for which is now reckoned at 42% of national output. As a result, the debt burden will reach 112% this year, according to the European Commission’s May forecast. Portugal’s, too, will vault above 100% of GDP, while Greece’s will rise to almost 160%.

  33. @Enuff

    The European Central Bank will have to bail Greece out of the present crisis again or the € (Euro) would cease to exist as a currency and all the member countries would have to revert to their national currency.

    What do you think will happen…would they [bailout] Greece or will they left them out? And if they [bail] them-out what do you think would happen when they are face with the same situation in a year- two or so???

    With Greece massive personal debt (Not ECB debt) in the area of 13billion that Greece owed to Germany and Germany’s taxpayer braying

    And to quote NY times (Global Business) Jack Ewing (April 2010) (April 2010)!!!

    “Germany is not the only European country that is exposed to Greek debt. France is Greece’s biggest creditor, with $67 billion in holdings, including $9 billion held by the Bank of France, according to Barclays. Italy holds $27 billion in Greek paper, followed closely by Belgium, the Netherlands and Luxembourg”.

    And wgat!!! with the Greeks grievance over Germany owning most of their National Institutions such as the Airports the museums etc. whilst their government are telling them that they have to tighten their belts! Not surprising that smoke is in the streets of Europe: Trouble is looming.

    Bajans should STOP selling-off the land to Footballers and musicians and gather some potato-slips, yam-heads and some banana-plants and get the teachers to teach the children the way I was taught a St Marks in the horticultural garden.

    (but let the Heads know that they can’t take all the produce home for themselves and their friends the way they did then. I still have a grievance about dah cause wen I saw those beautiful carrots, lettuce, cucumbers, and beetroots I was proud and wanted to take some home to show my family what I help produce but…)

  34. To my mind, Greece is not the cause of the impending Euro project meltdown, Germany is.
    Its willingness to constantly bail out the profligate countries riding on its back is not wise, effective or sustainable.

    The German economy is so out of kilter with its Euro partners, it is creating terminal tension to normal market operations.
    Without Bundesbank support the system will collapse, a situation which cannot go on forever. As constant handouts will eventually affect German exports, the real engine of the euro.

    If the deutschmark was reinstated the euro would be revalued to its proper level, that is the level the market judges the economies of the rump.
    I shudder to think what that may be, but that’s another story.

    Of course the French would go ballistic, and the farmers would be on the streets asking how could their neighbour, a truly successful economic giant, could abandon them to their fate at the mercy of the remaining basket case partners.

    The whole project as conceived was doomed to fail, so many disparate economies relying on the good faith of term politicians to keep within centrally imposed guidelines will never succeed IMHO.

  35. I am not an economist,and have no direct links or interest in party politics.
    There is a need for cost containment in Government .
    Expansion of the Social safety net is moving costs in the wrong direction.
    There are some decisions being taken which will widen the fiscal deficit, and here I would like to examine one of them.
    THE NIS unemployment benefit.
    The increase in the length of time one can claim unemployment was a decision which begs for re- examination.
    In the past, a person could work for 13 weeks, and get up to 6 months unemployment benefit.
    Then Government got the great idea that extending the length of the benefit period would be good in the present economic climate. Well, the new arrangement is that after working for 13 consecutive weeks, one could obtain NIS benefit for up to 9 months.
    This may be fine if the benefit was reserved for persons who worked a minimum of say, 15 years, and then found themselves unemployed through no fault of their own.
    This decision would have mopped up a lot of reserves of the portion of the fund which responds to unemployment.This may mean that a further upward contribution may be contemplated by Govt to fund this misadventure.
    Now, new Minister Dr. Byer Sukoo in her first public utterance after being given theN IS portfolio , says she is considering making it even longer than the 9 months.
    Has the NIS leadership provided the Government with a projection on the financial impact of the decision? If left unchanged, what will happen? If this has been done, does the Goverment understand it?
    In the old 6 month regime, there were persons who would not accept a job until the 6 month period of benefit was over. Now they have 9 months.This does not help persons to actively get out there and find a job, or to make things work.

    • @Independent

      This is what we mean when we say decisions are being made out of political expediency and not based on rational thought.

      Certainly an actuarial study is required here?

    • fyi

      Why investors shouldn’t bet against China’s economy
      From Monday’s Globe and Mail
      Published Sunday, Jun. 19, 2011 7:36PM EDT
      Last updated Sunday, Jun. 19, 2011 7:45PM EDT

      There will be a lot weighing on the markets as summer arrives this week: more European Union meetings about Greece, the QE2 finale and comments from the Fed, to name a few.
      As sentiment wavers, it seems a good time to step back and look at the fundamental forces at work. Jurrien Timmer, director of global macro for Fidelity Management & Research Co., cuts through the noise by looking at five key asset classes: China, currencies, bonds, consumable commodities and precious metals.

  36. Government has to reduce the size of their cabinet, drainage can return to MTW, Walters post at BWA should be abolish, so to Harry Husbands and Jeptor Ince, even our new minister Denis Kellman should be removed, along with Irene Sandiford. Suckoo should be asked to return to her practice and Denis Lowe take up her ministry, with Denis Kellman his assistant. These changes are needed in an effort to reduce the expenses at the high scale of government, each ministerial post is equavilant to ten average civil servant’s salary. Hard measures have to be taken and difficult decisions have to be made, but delaying them will hurt the citizens more than doing it NOW>

  37. @ Straight Talk
    The whole project as conceived was doomed to fail, so many disparate economies relying on the good faith of term politicians to keep within centrally imposed guidelines will never succeed IMHO.
    You could be talking about CSME….. so are you agreeing that one of the best things we EVER did in the Caribbean was to have failed to get that nonsense started…..
    ….except of course for Barbados – where”the man who now has all the answers” wasted millions of dollars in time, resources and effort, and butchered our Laws and legal system; in the name of this foolishness….?

    We will pay for years…

  38. Check out S & P report. Stand corrected, it like is a new one for June. Look like this gov’t went on a blasted spending spree, the climb in gov’t debt is very high. I now understand Mascoll, the gov’t complicate an int’l recession by creating its own domestic mess with excessive borrowing, and making its current account deficit worse. Like the idea of comparing oneself with ‘peers’ and we are doing worse than our peers in C’bbean Aruba and Bahamas. AOD and Frank Talk had it right, you cannot compare yourself with last in class and pat yourself on the back. Since this gov’t take over, the trajectory withthe average performance took a nose dive, and one assumes that the average was affected by the int’l situation. This ignorant gov’t run mad with debt. That first spike in debt in 2008 was a bad mistake bringing to book bolts. Then they went on their own spree, and it runawayyyy. Bad business. Shareholders in an int’l commpany looking at this performance would fire their ass. If that growth does not happen, and my girl Kalinga relying on Four Seasons and other such projects. She also relying on ‘tourism receipts will grow’, I don’t trust the governor figures, so we ‘ass is grass’ if dem think spending increase. All yuh better pray that int’l situation improves or the meaures to cut spending to meet income gine kill we.

  39. @ Bajan Truth(?)

    Bajan if you are going to quote me READ me CAREFULLY.

    FrankTalk postings:
    June 18th 8:04am.
    June 17th 19:17pm
    June 17 4:21 pm…
    and any other you wish

    The posting below is probably the one you are referring to…it’s a question…though written badly. I wouldn’t bother to correct it here for it is implicit. Forgive me.

    FrankTalk | June 17, 2011 at 9:17 PM |

    PIGS (Portugal, Ireland, Greece, Spain.) You mean it like saying Barbados is in a higher class of losers]

  40. It is Very easy To Forget: Short Economic Memories In Barbados

    The challenges we now face must be put into a context and avoid the Tea Party like angry lashing out and politicizing of issues. The Barbados situation reminds me so much of what Obama faces in the USA.

    1. It is easy to forget how dependent the Barbados economy is on tourism and international capital flows (especially for property investments). Given that the global recession was been especially long and severe, and the recovery weakest in the major source markets for our tourists and capital flows, it meant that Barbados would be severely impacted in terms of tourist arrivals, tourist expenditure and international capital flows. Aggregate demand, GDP, employment, government revenues and foreign reserves were bound to be negatively impacted. In 2008, Real GDP declined by around 1%, it declined about 4.8% in 2009 and grew by around 0.3 % in 2010. Given those numbers and the length and depth of the global recession in our major source markets I am not persuaded by arguments which suggest that domestic policy aggravated the impact.

    This comment split out to another blog.


  41. Actually the economy grew by 0.2% in 2008.

    By the IMF calculation debt to gdp was around 63.4% in 2000, by 2007 they were reporting it at 103.3% of gdp in 2007 and its around 123% of gdp today.

  42. @Trained Economist: “Actually the economy grew by 0.2% in 2008.

    @TE: “By[sic] the IMF calculation debt to gdp was around 63.4% in 2000, by 2007 they were reporting it at 103.3% of gdp in 2007 and its around 123% of gdp *today*.

    Please forgive me for this… but could you please define “today” to your above?

    Just asking, for clarity….

  43. David,
    Once again a bit prescient. Apart from the typos, I won’t change a word. It is interesting to note Justin Robinson’s excuses.

  44. Troo, dis. It must be a major fücking diissapoint, Poly boy, that the nation never called you to your bizarre perception of your vocation. LOVE the “Ivy” stuff, though.

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