There is the saying in Barbados that if the USA catches a cold small open economies like Barbados will likely catch pneumonia. The US economy continues its long road to recovery which was precipitated by the 2008 financial collapse. The protracted nature of this recession is the one feature which differentiates it from the others which a post-Independence Barbados has had to confront. Given the current structure of our economy, how the US goes, so too Barbados. It should therefore be of concern to Barbadians that Americans are becoming increasingly frustrated at the inability of their economy to ‘fire’ almost three years since the global economy went to hell in a hand basket, see The Trading Report – 10 Signs That The American People Are Starting To Freak Out About The Condition Of The Economy.
A disappointing aspect to some of the debate targeting government’s management of the economy, has been the scathing criticism of the Governor of the Central Bank Delisle Worrell Barbados Labour Party Opposition principals responsible for economic matters, Owen Arthur and Clyde Mascoll and others in the media. There is nothing wrong with questioning the numbers but there must be a line drawn if it means the integrity of the Central Bank and agencies that supply statistics are being maligned. The Governor does not manufacturer the numbers delivered in the Quarterly Reviews. He explained in his last press conference that the Central Bank collaborates with several agencies to support its forecasts, the very same agencies used by the previous government.
To show how highly regarded the pronouncements coming from the Central Bank are viewed by, Olga Kalinina, S&P’s director of sovereign ratings referred to the Central Bank’s recent economic review which was factored into S&P’s determination to maintain Barbados’ BBB-minus rating. She further concurred with the Governor’s forecast of a 2% growth for the current financial year. We also heard President of the BHTA Colin Jordan suggesting a 2% growth is possible if tourism performs reasonably well. Should these people be attacked as well by the opposition?
The upcoming Budget will be interesting because despite cries from Barbadians intoxicated by the good life of the boom years, Minister of Finance Chris Sinckler has signaled the government has to maintain fiscal discipline if we are to narrow the deficit and protect the foreign reserves. BU makes no apology by acknowledging that we are sympathetic to the government’s position at this time. Despite the prognostications of several local economists those at the helm of governments around the world are in uncharted economic waters. We need to stop politicizing the issues and work together to ensure Barbados survives this economic tsunami.
BU is satisfied the government is on the right track as it battles to curb expenditure, maintain employment, reduce the deficit and defend the dollar. Our information suggests that up to May 2011 government improved its revenue position over May 2010 by over 7%. The government’s challenge however will be cutting expenditure and although May 2011 over 2010 increased by over 3%, it would be emboldened that public sector wages and salaries decreased marginally. Overall the push to reduce the deficit is headed in the right direction albeit not at the rate BU would like to see with a marginal reduction in May 2011 over same period last year. Current trend if carried over to June should give cause for hope.
No doubt Minister Chris Sinckler will build on the position which sees key indices trending in the right direction. The challenge will be to maintain fiscal discipline and at the same time build out a safety net to protect the most vulnerable in the society. Through it all he will be cognizant that the US market to which our fortune is pegged remains sluggish as US legislators haggle about raising the debt ceiling to 16 trillion dollars.