Walter Blackman
The Barbadian economy is small, fragile, and open. Because of its openness, it has always been, currently is, and will always be susceptible to the effects of exogenous shocks
The Barbadian society is materialistic and consumer oriented. Society is defined here as individuals, businesses, and Government combined.
The continual clash between economic capacity and societal need has naturally demanded a sensible response of balance and equilibrium from policymakers throughout the years. The administrations of those Prime Ministers (PM) and Ministers of Finance (MOF) who recklessly put the Barbadian economy into a state of disequilibrium to satisfy their general election (1981, 1991) political needs, and who ended up on the doorsteps of the IMF, were voted out of office the next election they faced.
If we adopt the government’s philosophical attitude of putting the society first, then we can attempt to trace how our current economic problems developed.
A young man goes into a shop and orders whiskey. His friend goes to town and purchases a refrigerator. Both of them spend Barbadian dollars, but the country uses foreign currency to purchase the products they bought. When we add up all of the spending by individuals and businesses, the foreign currency the country has to pay becomes quite significant. When we add in government, the foreign currency requirement becomes gigantic.
The fiscal objective of a responsible government is to achieve equilibrium. That is, to spend what its revenue can support. If the government records a deficit, expenditure needs to be cut to fall back in line with revenue. If no action is taken, then the deficits widen.
Widening fiscal deficits not only mean that government is spending more Barbadian dollars than it has collected, it also means that government is crowding out and suppressing the business sector by borrowing most of the available investment dollars to pay for its excesses. Furthermore, excessive amounts of foreign exchange must be used up to pay for all of the goods and services the government is purchasing from abroad, including fees paid to foreign consultants and advisors who perform work that Barbadians can do.
To continue our trace, let us assume that the society has BDS$8 billion available to purchase goods and services. Let us assume also that 70% of this money supply will be spent, and that we import 80% of the products we consume. Let us prudently add a foreign reserves buffer representing 3 months of imported supplies into the mix. When we do the math, we find that having BDS$8 billion available (the money supply) creates a need for US$2.8 billion (foreign reserves). Where is this foreign exchange coming from? Who is planning for it? What strategies have we put in place to consistently generate it?
The Central Bank of Barbados (CBB) and the foreign reserves of Barbados have been required to come in at the back end to bear whatever economic and financial pressures have been created through the “society first” approach.
Having seen the damage created by the government’s “society first” approach, the IMF is recommending that we adopt an “economy first “approach. Now, the focus is switched towards the country’s economic and financial capacity, and the fundamental question then becomes: If we have only US$1 billion in foreign exchange, how much Barbadian money should be “supplied” to society? The answer is roughly BDS$ 2.9 billion.
Under this approach, when we compare the desired BDS$ 2.9 billion needed to keep the system in balance, against the actual BDS$ 8 billion that has been made available to satisfy society’s needs, then we can clearly see the disequilibrium that has been created and the immense pressure that has been brought to bear on our foreign reserves. This is the heart of our country’s fiscal and monetary problem and almost every recommendation from the IMF is aimed at dealing with it.
The money supply must now be gradually choked off to reflect foreign exchange capacity. This means that the spending power of individuals, businesses, and government must be reduced. Regardless of whatever the society wants, limited economic and financial capacity will be the new constraints that must be respected.
What are the political ramifications emerging from the IMF consultation report?
Relying upon the CBB to finance government’s widening deficits could never be a sustainable strategy. The Governor of the Central Bank has maintained this position all along, so we can reasonably conclude that the MOF has been disregarding the governor’s advice. To immunize the country from the risk of possible ‘ministerial’ abuse, the IMF is recommending that the Central Bank Act be amended to prevent the Ministry of Finance from overruling the Central Bank.
Our current system forces the Governor of the Central Bank to accommodate or facilitate a wayward and imprudent MOF beyond reasonable limits. To use Dr. Courtney Blackman’s words, our system turns the Governor of the Central Bank into “a creature of the Minister of Finance.” There will come a time though, at which point the Governor should resign or be removed, before he is pressured politically to put the discipline of “equilibrium” economics at risk. To correct this unsatisfactory state of affairs, the independence of the Governor of the Central Bank needs to be established, and he should be delivering his reports from and to The House of Assembly.
With the IMF poised to play a major role in the medium-term economic management of Barbados, the difference in perspectives between Owen Arthur and Mia Mottley now produces a more tactical, rather than personal, flavor.
Owen Arthur appears to believe that the BLP should wait until the Freundel Stuart administration has signed a structural adjustment agreement with the IMF, after it has administered the unpopular medicine in an environment of economic decline, and then vigorously attack it when it is faced by dissent on the inside, and public anger on the outside. In short, Owen believes that the same stick that licked Sandy can be used again to cut Freundel’s backside. At the same time though, Owen must be acutely aware of a liability that he is carrying on his political balance sheet. The government’s limited financial options today have been created by a monstrously high level of public debt. The Arthur administration contributed significantly to the piling up of that debt during its 14 years of existence.
Mia Mottley must be thinking that Owen’s approach carries some risks. Suppose the Freundel Stuart administration signs a structural adjustment program with the IMF, meets all the prescribed targets, satisfies all of the conditionalities, and by 2018 has the Barbadian economy showing signs of growth thanks to a buoyant world economy? Having provided no alternative solutions to the country’s monetary and fiscal problems when the crisis had reached its zenith, Mia would see her task of capturing the government under such a scenario to be relatively more difficult. As far as she is concerned, it would be much better and easier to exploit the government’s vulnerabilities now and create conditions conducive to triggering its political downfall. Once she becomes Prime Minister, to her mind, the Barbadian electorate could be easily made to understand that it was the DLP political vagabonds and tricksters who indulged in excesses and lies and forced the country into the arms of the IMF. Thus, she will predictably plead the case that the Mottley administration has no choice but to administer the bitter IMF medicine.
Looking through the eyes of the PM, the situation is becoming dire. The IMF consultation report gives his administration a failing economic grade for making a worse public debt situation worst, for widening the fiscal deficit, and for putting the foreign reserves of Barbados under severe pressure. The economy of Barbados seems now to be in more danger than a tethered bald-pooched cat trying to escape the knife of an impatient Korean cook. Certainly, this cannot be the outcome that the government is paying so many advisors, consultants, and ministers to produce
The economic and financial policies pursued by the MOF have all resulted in failure, disappointment and now despair. Astonishingly enough, he has also admitted that investors have been pulling their money out of Barbados because they have lost confidence in him, and by extension, the government. The time has now come for the PM to allow his MOF to retire hurt. New economic advisors, financial consultants and innovative ideas must be sought to take the country beyond the medium term. Most importantly, the leader of the society must now become the leader of the economy.
The IMF has stated categorically that even if we succeed in meeting the cut in the money supply slated for 2014, “foreign reserves would remain below desired comfort levels and Barbados would require external financing in later years to maintain reserves above a notional threshold of 3 months of import”. This statement, to my mind, is the nearest anyone can come to suggesting that a structural adjustment agreement between Barbados and the IMF is now practically unavoidable. The twin devils of procrastination and indecisiveness look like they are about to deposit a weakened Barbadian government upon the doorsteps of the borrower of last resort.
The IMF is also warning us that because of a much higher debt burden and limited financial options on the part of the Barbados government at this time, any prescribed solutions, when compared to those of the 1992 agreement, will be much, much more devastating.
The urgings of Mr. Ryan Straughn, Professor Michael Howard, and others for the government of Barbados to approach the IMF earlier, when it had more wiggle room, must now be unanimously accepted as wise and visionary.
Yet, tough though the road ahead appears to be, the government of Barbados must continuously seek to pursue policies that would stimulate economic activity. Barbadians are being exhorted and encouraged by government to become entrepreneurs on one hand, but are being frustrated and thwarted in their entrepreneurial pursuits on the other. One obstacle to entrepreneurial undertakings, frequently mentioned, is the length of time it takes to secure building permission from the Town Planning Department.
Given the scarcity of land in Barbados, government has already taken the road that led to high-rise public apartments. If we apply this thinking at the residential level, then we have reached the point where we can easily allow 3-storey residences (2 floors for living, one for entrepreneurial pursuits). Government can now get involved in the process by highlighting safe and desirable building structures and designs. Plans for 1-3 storey buildings that satisfy government’s requirements would now be categorized as “Prototype Plans” and permission for building can be granted in a matter of days. Our masons, electricians, plumbers, and carpenters would welcome the work.
It is this kind of informed thinking from the beneficiaries of free education rather than clinging on to the coat tails of political expediency that the public should have been offered long ago. Continue to educate without bias and your integrity and credibility would remain intact. A thought provoking, well-reasoned and truthful commentary. Alas, though, methinks there is little room left to wiggle as Bushie would imply.
BARBADOS problems started from the inside not the out side, BLP and now the DLP, cant blame outsider for what insiders do and still doing , , to the people and the Nations , Distraction and talk about others will not help.
Self Inflicted wounds, last place to b shot is the head, the foot and all other part are bleeding NOW
@ Walter Blackman:
“The economy of Barbados seems now to be in more danger than a tethered bald-pooched cat trying to escape the knife of an impatient Korean cook. Certainly, this cannot be the outcome that the government is paying so many advisors, consultants, and ministers to produce..”
Brilliant put, Wally! But what can you expect from a Cabinet which has within it the likes of Jepter “Physical Deficit” Ince and the quack Boyce?
“The urgings of Mr. Ryan Straughn, Professor Michael Howard, and others for the government of Barbados to approach the IMF earlier, when it had more wiggle room, must now be unanimously accepted as wise and visionary.”
If the above statement is a clear case of support for the position taken by the two gentlemen then we couldn’t agree with your more.
It’s time the DLP administration swallow its dented pride and bite the bullet.
Although we doubt very much Fumble would give you an audience (seeing you in the same light he sees David Estwick) what other course of action would you recommend be immediately followed to stave off the dreaded devaluation that would certainly undermine the integrity of the NIS and the capacity of government to meet its unfunded pension obligations to that group of baby boomers of the early 1950′ and also to a growing list of welfare dependent young people?
We are looking at selling off some of the State owned and controlled assets in a way that would ensure government retains some measure of regulatory and decision-making influence over their operations. This move to privatization would give the government some fiscal space and reduce its debt burden.
To immunize the country from the risk of possible ‘ministerial’ abuse, the IMF is recommending that the Central Bank Act be amended to prevent the Ministry of Finance from overruling the Central Bank
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I don’t necessarily agree with that prescription, unelected mandarins should never have power over elected officials who serve at the pleasure of the people. The Gov’t and the MOF will have a price to pay if the Electorate loses confidence in their ability to manage the economy. Has the IMF ever suggested a similar approach to other countries and can you imagine them suggesting same to an Owen Arthur led Gov’t? Perhaps they could but his response would be unprintable.
The IMF must have read the mood of the Bajan public/politicians who are always looking for band aid solutions to solve any issue. That recommendation should not be accepted by the present Gov’t and rightly so, it would be unwise to hamstring this or future Gov’ts.
Wally
Do you appreciate that MAM will NEVER EVER be a Prime Minister in Barbados? Just last week or week before powerful businessmen like COWSY, BIZZY, BJERKHAM, TEMPRO, MALONEY and several other we encouraging ESTWICK to meet privately with Arthur, Mascoll and Symmonds?
@ Sargeant | February 19, 2014 at 10:08 AM |
What about the model followed by the “Old Lady of Threadneedle Street “?
Since Barbados has a Westminster system of governance with no intentions of changing it in the foreseeable future why not adopt a revised model of the Bank of England in the setting and implementation of monetary policy to minimize the potential for the day-to-day political interference, abuses and excesses of the country’s fragile monetary policy frame work?
It’s sad to see how the lunatics (with special reference to our politicians, our business community and their supporters) have taken over the asylum called Barbados. With each passing day news leaks out that an approach has been made or consideration is been given by Barbados to establish economic, social and political ties with countries other than the UK, USA or Canada.
Not so very long ago it was China, than India, followed by numerous other countries. A couple of days ago it was UAE, Colombia and today I had to check my calendar just to check that it was not April’s fool’s day (April 1st) as I had read that Barbados appears to be coveting NIGERIA!!!!!! The Ten Commandments informs us that we should not covet our neighbours. At this rate we will have to start inventing countries that may be able to bail us out or reinvigorate our economy.
The bar is been set low. Increasing flights to Colombia may bring in extra revenue; however rest assure it will bring in organised crime. You may be surprised that in a report earlier last year in the UK it was reported that Nigerian tourists were the third biggest spenders of all nationalities! Sadly Nigeria is a country so endemically corrupt and fraudulent that it comes as a surprise to most people that its life support machine is still functioning. Perhaps there is a correlation here?
If we have to run cap in hand to other countries, can we please do some desk research or some secondary research?
If we as a country are so desperate may I suggest that we start talking to countries like Norway, Sweden and Denmark? These countries function exceptionally well. They have small populations, low crime rates and “small” economies. They do not practise crazy neo-liberal policies. Nor do their governments sell out their people. Their infrastructure is extremely good. They respect their environment and they have a high standard of living.
It’s sad to see how the lunatics (with special reference to are politicians, are business community and their supporters) ……correction!!!
@ Walter Blackman:
“The economy of Barbados seems now to be in more danger than a tethered bald-pooched cat trying to escape the knife of an impatient Korean cook. Certainly, this cannot be the outcome that the government is paying so many advisors, consultants, and ministers to produce..”
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Paying them to do what is the question. Given the infinite monkey theorem http://en.wikipedia.org/wiki/Infinite_monkey_theorem they may all eventually produce something of substance but by then Barbados would have experienced the equivalent of a Pompeeii type economic event. I would not want my great great grandchildren to be studying the history of the once great island nation of Barbados which was destroyed by Stuart the Fumbler, Sinckler the Clueless and Worrell “just print more money” the Governor.
@sargeant
The Gov’t and the MOF will have a price to pay if the Electorate loses confidence in their ability to manage the economy.
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Please forgive me for saying this, but the only confidence around in Barbados now are the Sanitary Napkins that carry that brand if they still exist.
@ Walter Blackman:
Given the scarcity of land in Barbados, government has already taken the road that led to high-rise public apartments. If we apply this thinking at the residential level, then we have reached the point where we can easily allow 3-storey residences (2 floors for living, one for entrepreneurial pursuits).
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I have been saying this for years especially given smaller lot sizes for houses….. it just makes good sense……..
live on two rent out one.
live on two have a shop or other business on one.
If you and the madam have a parting of ways: she lives on two(of course you know the court will give her two) and you live on one
The infinite monkey theorem states that a monkey hitting keys at random on a typewriter keyboard for an infinite amount of time will almost surely type a given text, such as the complete works of William Shakespeare
@Walter
A good expose of the state of the union Barbados.I am of the opinion that comparing 1981 and the resulting loss of the BLP at the poll of 1986 is not a comparison at all.I posit the view that Tom Adams was a brilliant and very clever politician(in adddition to his wealth of positive attributes)and if he had been alive to lead the Bees,I suggest the result would have been different.
You mention piling up of debt by OSA.If the Bees had been successful at the poll of 2008,there was enough conidence in OSA by investors in the country Barbados that ,in addition to whatever measures he would have carefully thought out and implemented that we would be sailing merrily along with a decent GDP to show for our belt tightening.
I am having difficulty seeing what I am writing and wonder if David can suggest a method to rectify this disadvantage.
Gabriel,
I thought Tom Adams was still dead, did he come back to life?
@Question 10
It is said , don’t say ,never ever . but I can safely say that you , Ac, Mark Fenty and the rest of the DLP mindless idiots will never be bless with intelligence .don’t question it
@Question 10
What kind of a recording equipment did they put in you,
@ watchman laughing my ass of and pissing my draws…..ur comment @ 3.31
where did this guy go wrong in his presentation?
Who is listening to this Bajan expert David Ellis is currently interviewing on program 6:30? Looks like he has been reading BU (not ac).
@ac
What is your take on Ryan Straughan’s presentation.You definitely must be sh…tg and pissing your pants at the same time now.Worrell,Sinckler and Fumble run and left the goal bar exposed..The IMF forwarsd bearing down the middle and look like they will score.DLP scumbags got Barbados in potter
It seems to BU Jeremy Stephens is very handy with information discussing the Estwick UAE proposal.
The tourist business in Barbados reminds of me of how the automotive business in the USA was forced into a new corrective start. When Hondas and Toyotas first made their way to the USA they were frowned upon and the Big 3 did not pay attention to them. Well they got better and better and better and of course were more competitively priced. When the public realized there were better deals than those offered by the Big3, they began to switch in very large numbers. We all know what then happened and what devastation was brought to places like Detroit. Seems to me that is similar to what happened in the Barbados tourist industry. We didn’t pay attention to what the competitors were doing and all of a sudden there were lots of places to visit with newer hotels and cheaper prices. And just about all of the competitors have currencies that can be freely traded on the world market so when the US$ gains it makes their destinations less expensive and Barbados more expensive. We been living the dream and it now becoming a nightmare.
David
Do you have a link for the discussion by Ellis with Stephen and Skeete?
Please post the link nah?
@Gutterperc
Not updated yet.
The final para makes absolutely no sense.
balance continues to propose a 10% stabilization tax on earnings across the board.
No one in Barbados now doubts that the Nation newspaper is in the BLP’S pocket. It is truly the Fox news of Barbados – a media house which employs commentators like Mascoll, Ezra Alleyne, Harry Russell who have all declared their political affiliations but yet the management of the Nation insult the intelligence of Barbadians by claiming to be fair and balanced.
Now in another piece of hit and run journalism, on Thursday,Feb 20, 2014 the Nation BLP newspaper does a piece called “Poor Marketing hurting tourism” and extensively quotes throughout the article the President of the Barbados Employers Confederation Ian Gooding -Edghill.
Mr. Edghill launches a predictable critique of the government but the article never states if his position is that of the BEC and anyone reading this article who is a visitor to Barbados should have been told that the person quoted is also an opposition BLP candidate who was defeated in the last election.
A small dratil which would have brought some perspective but the Nation newspaper “forgot” to mention this.
Question for the Nation management – How come with all the people in Barbados with business and finance experience, the only two people that the Nation Newspaper can find to give a column on this topic is two BLP supporters who have publicly declared their political affiliation:
Clyde Mascoll and Harry Russell.
Fair and Balanced- Honestly?
I think they could fire Sinckler and call it a Economic Stabilization Adjustment.
@ balance
balance continues to propose a 10% stabilization tax on earnings across the board
Agreed….except that, based on the actual mess that we have found ourselves in, Bushie would make it 20% for 2014 and 15% for 2015 to start….and ONLY on earnings above $3000 per month…..
BTW ….are you not suggesting an effective salary cut of 10%?
Do you want to let the government know that there is more than one way to skin a bald pooch cat…?
Impressive piece of writing. You do not sound like a political yard fowl like some of the loyalist jerks on here. But that’s just from the perspective of your writing. But good piece nonetheless
@Bush Tea
Have you forgotten middle income esrners have given some dollars already?
Does Sinckler eat everything within his orbit? Have you guys seen the girth of that bitch?
He is walking heart attack waiting to happen.
@millertheanunnaki
Although we doubt very much Fumble would give you an audience (seeing you in the same light he sees David Estwick) what other course of action would you recommend be immediately followed to stave off the dreaded devaluation that would certainly undermine the integrity of the NIS and the capacity of government to meet its unfunded pension obligations to that group of baby boomers of the early 1950′ and also to a growing list of welfare dependent young people?
Miller,
Good question. Innovative and creative thinking is the key. For example, let us assume we spend BDS$1 billion in imports. That is the price tag being set by the distributive sector in Barbados, which manufactures and produces nothing. The structure of the global economy spells doom for the middleman. New opportunities are now being created in shipping and handling. Economic pressures are causing some interest groups to take to the national stage to defend their entrenched interests. Did I hear, just a few weeks ago, a call being made to curb the “barrel” trade? That tells me that the barrel trade is the emerging competitor. We can rely on Barbadians from the UK, Canada, and the USA to fill barrels with food, electronics, and clothing and send them directly to Barbados. This creates a situation where we have foreign goods, already paid for in foreign currency, turning up in Barbadian households. The IMF should have no problem with this activity because it saves foreign exchange. An innovative thinking government would seek to promote and facilitate the expansion of the barrel trade. Using technology to determine that there are no drugs, explosives, weapons etc in the barrels, these barrels should proceed quickly, hassle-free, and tax-free to their owners.
I will take a deeper look at The NIS and unfunded pension liabilities situation soon.
Thanks Walter!
70% of our GDP is domestic consumption.
Balance theoretically your proposal sounds good …h even though it would benefit the masses .However i don.t belive it to be feasible at this time since govt is short on cash in a more favourable economic enviroment it would work..
last night VOB sponsored a live broadcast forum on the “economies of the carribbean..many interesting questions were asked to the host one who is well knowelageble economic affairs .attended by many journalist local and international.. it gave an indepth outlook to the economic preformance of carribbean countries and there best advantages of moving forward.hope many got to watch.as the answers were not politically bias
@ David
Have you forgotten middle income esrners have given some dollars already?
Somehow it seems that no one REALLY understands how perilous our state is at this time ..
….unless EVERYONE now sacrifices unselfishly, we will ALL come to see what “giving some dollars” really means.
Even the poor among us should be asked to play a part. How the hell can a people who are so clueless, non-productive, laid back, fumbly and dependent on outsiders – expect to enjoy a first world lifestyle – and to continue to do so when the economy is in chaos?
Even the productive and innovative societies of the first world are cutting back and sacrificing…..while we are concerned about giving up our personal (mostly undeserved) gains …and devising plans to borrow more money from them….
@ Walter
You must know that Bajans would ONLY seek to “innovate” and promote the barrel trade if everyone else had already done it successfully…
….or if a certain, well-known segment of society stood to benefit massively from its implementation.
Until then, OUR POLITICIANS will be instructed to restrict it….
@Bush Tea
You have been told before we will have to crash. Consumption habit is now embeded.
@ Walter Blackman | February 20, 2014 at 9:31 AM |
“We can rely on Barbadians from the UK, Canada, and the USA to fill barrels with food, electronics, and clothing and send them directly to Barbados. This creates a situation where we have foreign goods, already paid for in foreign currency, turning up in Barbadian households. The IMF should have no problem with this activity because it saves foreign exchange. An innovative thinking government would seek to promote and facilitate the expansion of the barrel trade.”
Excellent observation, Walter! Others on BU like Old Onions Bag have expressed similar alarm at such a move to tax barrels shipped by people in the Diaspora.
The fact that we have an administration which claims to be the champion of the poor and working class and can seek to deter or ‘over-tax’ such an activity not involving significant outflows of forex especially in the current harsh economic times speaks volumes of whose interests the current DLP is elected to serve. Is this a proposal from the BCC in exchange for Lalu’s public support?
But we are not surprised since similar punishment on the working poor was imposed with the unjustified 50% reduction in the reverse tax credit . You can soon expect the total elimination of this tax benefit in the next budget as a way of ‘appeasing’ the IMF Master instruction to remove existing tax concessions and waivers.
What would you have to say to a proposal where the government introduces a policy to deter the importation of vehicles (for private or domestic use) in excess of 2,000 c.c.
(2 Litres) engine capacity?
Scarce foreign exchange earned by hardworking Bajans should not be used up to pay for imported vehicles in excess of that engine size limit. There could be a few justified exemption in respect of ‘official’ cars for examples GG, PM, CJ.
Drivers and owners who want to indulge in such nationally unaffordable luxury would have to earn the forex to import such vehicles. This would not apply to Barbadians returning home to settle as long as the luxury vehicle has been paid for with non-Barbadian generated forex.
A special annual luxury tax (via the existing road tax system) should be imposed on those luxury vehicles to help defer the cost of imported fuels to run those “Pharaoh’s chariots” on the small roads of 2×3 Barbados.
The much vaunted policy of ‘greening’ the economy and the environment would then have a ring of truth about it.
Yeah, taxing barrels of food to help the poor, only a soft-in-the-head female ala Sandiford-Garner would be dumb enough to come up with something that is counter-productive.
When the Senator made the suggestion to tax barrels was she thinking about forex opportunity or the avenue for government to rake in some easy taxdollars?
David…………..on another note, I would just like to give kudos to the many very talented and dedicated doctors at the QEH on behalf of one of our beloved BU commenters, in his own words:
“I can say with certainty that i could not have had better treatment any where in north america. What we have in Bim is top class.”
I am sure when he feels better, he will expand on this.
Please tell the Central Bank Governor that saying that confidence is returning does not make it return……………….this man is a bere joke
@ Walter,
Nicely articulated position on the Barrel Trade. In light of your position for further expansion, how would Government compensate for the fall out in revenue as a result of no import duties and VAT if it were to be expanded.
Secondly, wouldn’t an expansion of this nature lead to further deterioration in Forex exchange given that we are a consuming society, and the barrlel trade is supported by a high % of barbadians shopping overseas?
At Balance and Bush Tea: are you suggesting that giving these idiots more of our money to piss away will change their behaviour? Anyone can captain a ship in fair weather, Fumble’s Fools have proven they cannot steer a ship in foul waters, especially when trying to go round in circles rather than set a course and destination.
As I recall Senator Sandiford-Garner made the observation that the barrell facilitation trade should be taxed at a higher rate because of its apparent popularity.She was roundly taken to task in the ‘surface’media for the
comment.I took her to task also when I went to the Hoe and Sickle Bar in
Belleplaine.It was the same day Police bowl out Empire for 26.
Only a very small part of the barrel trade is actually paid for by persons living overseas. The sheer volume of that trade is down directly to persons being able to avoid import taxes. Bajans off to Miami in their droves have the barrels delivered to and collected from their hotel rooms. Saving of forex what?!! Many commercial operators use the barrel trade to import their goods and circumvent the tariffs and VAT. Guess how many bikinis you can stuff into one barrel that you can sell at $100 each.When the barrels arrive in Barbados they jam up the port, tie up the customs officers and impede regular trade. What used to be a way for the less well-off to get some much needed goodies for Christmas is now big business.
@ Peltdownman | February 20, 2014 at 4:36 PM |
“The sheer volume of that trade is down directly to persons being able to avoid import taxes. Bajans off to Miami in their droves have the barrels delivered to and collected from their hotel rooms.”
If what you have asserted is indeed the general case then these items ought to be subject to the regular regime of duties and taxes at the port of arrival.
From what you have outlined it seems it is indeed a thriving commercial undertaking and should therefore be subject to the same import and clearance rules and regulations as the regular importers.
The question to you though (since you seem rather informed) is from where are these barrel traders getting the foreign exchange to go overseas and buy goods for resale other than the annual legal limit allowed to people travelling overseas on holiday?
@ Walter Blackman
Your assessment of the strategies of Owen Seethru and Mia why you bite me are incredibly spot on.
Owen seeks to wait it out and, irrespective of what this DLP government does, they will loose , too much of doing too little, they would have to bring this country to a state where 1% is unemployed, but we all know their a$$ is grass.
It would appear that you have eyes and ears in the camps of both of the pretenders in waiting.
THe irony of this matter is that Seethru, the one who the scales seem to favour, given the ineptitude of this DLP government, is in no small part responsible for the malaise that we find ourselves in.
So, let us say that Mottley is, in spite of her multi-lingual skills, emphasis on the “lingual” being actively considered by the electorate, what can she do to tip the scales in her favour, during this period of waiting?
@All
Who heard the Governor Worrell on radio today roundly stating that he does not support floating the Barbados dollar; it would ‘sink’. To which we heard peals of laughter.
Here is the very revealing interview which David Ellis conducted with Jeremy Stephen (President of the BEC and Doug Skeete, Accountant.
http://vob929.ocmnet.net/VOB/Programming/PublicAffairs/630.aspx
There is persistent thinking that runs thru most of the topics presented on this blog. That is one of the shirking of responsibility of the citizens of the country. The lack of understanding the concept of civic purpose. Yes, politicians, leaders etc we either praise or blame but when will it come down to us… we the people, we run around like chickens with heads cut off, preferring in every fashion to remain blameless.We punt, that is all. We wake up suddenly after a slumber of 15 years to deride Owen Arthur. We have now, only now, understand that the PM has his own peculiar way of handling matters. Now truly whose faults is that.. it is ours as we never paid attention or cared. Now that the proverbial shit has hit the fan, we have suddenly decided that the “leaders” of the country, present and past, were not made of the great stuff and served us indifferently.
I could care less for Dennis Lowe, but having driven thru the Belle shortcut a few weeks back and seeing a tossed TV and strewn garbage here and there, i’m thinking that until we lift ourselves from this low standard of civic mindedness, then could we expect better from our leaders.
It is bottom up folks not top down. And for those cockroaches who refuse to accept our deficiencies in the name of patriotism or politics, then i say:you are the real traitor to our country
David
What was the conclusion of the parties? The plan can or cannot work, it has merit or it does not?
Skeete is on the fence but Stephen believes, like BU, that it is a departure from the same old same but it needs work. Marks should go to Estwick from putting something out of the box on the table.
The plan is a good academic exercise, but best let alone in the real world.
CHAUCER
Can you give us your reasoning and more specifically your qualifications in the area of economics or national debt management?
In order to properly assess any plan, do we not need to specify the problem we face and the objectives that we must achieve in order to address the problem?
Problem
1- We have been living above our means for a very long time.
2- we have reached our credit card limits
3- our regular bankers are demanding that we reorganize our lives and position ourselves to pay down these debts
Objectives
– Reduce our credit card usage monthly ….ie reduce staff (expenses), cut out luxuries, sacrifice a bit.
– Get a better paying job or a higher salary (improved productivity)
– come to an arrangement with our bankers
Longer Term
-Restructure our operations such that we can afford to live within our means each month
It is not a ‘solution’ to go to a new bank for a nice new credit card…
@Gabriel
Tom Adams was a brilliant and very clever politician(in addition to his wealth of positive attributes)and if he had been alive to lead the Bees,I suggest the result would have been different.
If the Bees had been successful at the poll of 2008,there was enough confidence in OSA by investors in the country Barbados that ,in addition to whatever measures he would have carefully thought out and implemented that we would be sailing merrily along with a decent GDP…
Gabriel,
Whilst you heap praise, justifiably so, upon Tom Adams as a politician, others have the right to scrutinize him as a PM and MOF. Remember, he is the first MOF and PM to introduce Barbados to the IMF. Furthermore, whilst taking the IMF medicine he still persisted with his irresponsible and errant ways for a while, making the pace of economic recovery much slower than it had to be. He is dead, but the problems confronting us are very much alive.
I appreciate the fact that once in a while we all take a moment to day dream. So here you are delightfully picturing the Bees being successful at the poll of 2008, you see them carefully thinking out and implementing measures for our benefit, and we sailing merrily along in 2014 with a decent GDP. Wake up my friend.
Frustrated Businessman | February 20, 2014 at 3:10 PM |
At Balance and Bush Tea: are you suggesting that giving these idiots more of our money to piss away will change their behaviour? Anyone can captain a ship in fair weather, Fumble’s Fools have proven they cannot steer a ship in foul waters, especially when trying to go round in circles rather than set a course and destination”
IT DID CROSS MY MIND BUT MY FOCUS WAS ON FINDING WAYS TO REDUCE THE FISCAL DEFICIT
@Gutterp
Firstly, you must listen to the discussion Skeete/ Stephen; thereafter your comments will be welcomed .
Sadly you are tied with qualifications: so what about the qualifications of Dr. Estwick and yourself Mr. Gutter….
millertheanunnaki
What would you have to say to a proposal where the government introduces a policy to deter the importation of vehicles (for private or domestic use) in excess of 2,000 c.c.
(2 Litres) engine capacity?
Miller,
Let us assume that the policy introduced is based on a punitive tax. Most likely, rather than deterring importation, such a policy might force a lot of those persons desirous of owning a 2L car to still import and pay the tax. A new revenue source would be created. Of course, you have foreseen this, and have suggested that we use revenue from the tax “to help defer the cost of imported fuels.”
From a practical standpoint, private ownership of a car in Barbados will be deterred only when we have reached the stage where a person can get to all parts of the island using a reliable, cheap, and efficient alternative. We have to do a lot of thinking and planning before we get there.
“Problem
1- We have been living above our means for a very long time.
2- we have reached our credit card limits
3- our regular bankers are demanding that we reorganize our lives and position ourselves to pay down these debts”
Are you saying bushie that our beloved father of independence now dependence was wrong to gi wee the option to trust and pay later or don’t pay at all? the credit card syndrome is just the new fangled way of trussin; how then would we have been able to be upgraded from village status to upper class society if everybody couldn’t truss ? we would still be in the dark ages shitting in the yard with people like you only able to own a car or fridge or gas stove or use water toilet. Life is short enjoy it while you are able.
“He is dead, but the problems confronting us are very much alive.”
There we go again. The problems confronting us at this very moment in our history has nothing to do with Mr Tom Adams. According to Dr Estwick, it is the fault of the administration of which he is a part. The fact remains that Mr Adams when faced with economic challenges in 1981 whether of his own making or not took decisive action by instituting indirect taxation measures such as the transport levy and health levy which assisted in stabilizing the economy without much fanfare and of which, the effects on the affairs of the country were hardly noticeable. Mr Sandiford’s statement on the current situation was apt” how did we get back here” and If my understanding of Mr Sandiford’s statement is correct, he would most likely be referring to the period since he left office and obviously the current period for he did not make it during Mr Arthur’s tenure and certainly could not be referring to Mr Adams period in office. Debt did not start in Mr Adams time or in Mr Arthur’s time but in Mr Barrow’s time and debt is necessary unless we want to be left behind but the difference is that satisfactory management of the economy ensured that debts were paid. You would know that the first item in the Estimates of Revenue and Expenditure commencing in r Barrow’s time has always been DEBT CHARGES. We always paid our debts first and never defaulted on subscriptions/contributions to International or regional organisations. The difference between then and now is that those charged with the responsibility of managing our scare resources knew what they were doing so even where good intentioned decision making gone bad like SEAFOODS LTD, CARSICOTT, WARRENS CREMATORIUM, COAST GUARD STATION AT ENTERPRISE, CARICARGO, CARIBBEAN AIRWAYS, GREENLAND, GEMS or bouts of profligacy reared its ugly head from time to time to satisfy politically expedient election ventures were always able to bounce back. Now it seem we are on an Odyssey
“Barbadians are materialistic”
Name any society out of the two-hundred odd countries in or world today that isn’t driven by material acquisition? I fail to grasp the intellectuality behind such comment.
“Barbadians are materialistic”
Name any society out of the two-hundred odd countries in our world today that isn’t driven by material acquisition? I fail to grasp the intellectuality behind such comment.
Material acquisition in economic terms would obviously be defined as self-preservation, I would assume.
@ balance
Life is short enjoy it while you are able.
++++++++++++
Boss, …if this is your mantra – then it is no wonder you are so often off balance.
Life is about development. Both in character and otherwise. We are meant to leave the place in a better state than we found it…for our grand children’s sake.
Your mantra is all about selfishness and greed – and it is our worse enemy……what if your grand parents had taken that attitude? You would all now be paying for their selfishness….instead they sacrificed so you and Bushie can have a better life than they did…
As to credit cards….when did Bushie say that these were bad? Like everything else, there is a place for debt.
Responsible debt liabilities that fall within our ability to service are prudent and useful.
Maxing out out limits and leaving the debt for our grandchildren is selfish, greedy and downright nasty….
‘Life is about development”
DEVELOPMENT AND DEBT GO HAND IN HAND AND THUS I WILL ENDEAVOUR TO ENJOY MY SHORT SOJOURN HERE ON EARTH WHILE I AM ABLE FOR OPPORTUNITIES LOST ARE HARDLY EVER REGAINED..
Who would think that customs officers don’t know the difference between a barrel of food household items and a barrel filled with bikinis that they SHOULD tax accordingly, apparently something is very wrong at the port of entries, as far as I know the officers are supposed to OPEN the barrels, see what’s inside and charge the importer accordingly.
@Walter Blackman | February 21, 2014 at 1:21 AM |
“From a practical standpoint, private ownership of a car in Barbados will be deterred only when we have reached the stage where a person can get to all parts of the island using a reliable, cheap, and efficient alternative. We have to do a lot of thinking and planning before we get there.”
Walter, please let me make it crystal clear I am not against the private ownership of motor vehicles.
What I am concerned about is the size and, pari passu, the higher foreign exchange outflows to import large luxury vehicles into a very small island with already congested roads and faced with a serious foreign exchange earning crisis.
The large vehicles for private use has no relevance to the limited land space that is Barbados; nor can they be operated efficiently on the makeover cane cart roads. Barbados is not blessed with autobahns or 4-8 lane highways for which those large vehicles were designed to operate optimally instead of idling for hours in long lines of traffic burning up expensive fuel and befouling the environment.
What is wrong with a 1,600 or maximum 2,000 cc vehicle for private use that would reflect the dwindling ‘mauby’ pocket of the country?
Even countries with a higher standard of living and income per capita- but faced with similar geographical and infrastructural constraints as Bim- have moved to restrict both the quantity and capacity of vehicles using their network of roads.
There is no more time for thinking. The country is at crisis point and steps must be taken immediately to stem the outflow of scare foreigng exchange.
What should it be Walter, paying for imported drugs for the large group of people with hypertension and diabetes and servicing an exponentially increasing overseas debt or paying for a shipment of Mercedes Benz, BMW, Lexus and SUV for personal ostentation?
@Walter
The foreign reserves of the early 80’s were affected by the failure of the CMLCF with Guyana owing us millions of dollars which I dont know was paid off. Trinidad customs and excise frustrated many of our export businesses in the same period.My opinion remains that there is reposed in OSA a confidence unknown to this current PM and which is our current problem
Gabriel
It was not OSA who instilled or generated confidence. The financial and capital markets are concerned about the macro economic situation in Barbados and that is why this present administration is unable to get the confidence they so badly want and need.
I guess Barbados is really an economy and not so much just a society.
@millertheanunnaki
Walter, please let me make it crystal clear I am not against the private ownership of motor vehicles.
What I am concerned about is the size and, pari passu, the higher foreign exchange outflows to import large luxury vehicles into a very small island with already congested roads and faced with a serious foreign exchange earning crisis.
Miller,
I understand your position clearly. And I understand the similar point that would be made by others who argue that trucks and construction equipment above a certain weight exert extreme pressure on the roads of Barbados and a similar tax should be imposed on them to help defray the cost of road repairs. Financially, the intake of these new taxes could only help government’s fiscal situation, it can’t hurt. So, I have no problem with the angle you are coming from.
However, you know and I know, that no government wants to tell Barbadians that they are not allowed to buy a car. Given our current trajectory, there will come a time when so many cars are on the road that, regardless of how much taxes the govt has collected, they will clog the system. To get from point A to point B will take a long time in any direction. Having a private car then, of any engine size, would be costly and counter-productive. We have to start thinking, now, about the public transportation structure that needs to be put in place.
@Walter Blackman
“He is dead, but the problems confronting us are very much alive.”
@balance
“There we go again. The problems confronting us at this very moment in our history has nothing to do with Mr Tom Adams. According to Dr Estwick, it is the fault of the administration of which he is a part. The fact remains that Mr Adams when faced with economic challenges in 1981 whether of his own making or not took decisive action by ……..”
balance,
Which part of my statement suggests that “the problems confronting us at this very moment in our history” has anything to do with Mr Tom Adams?
correction: have instead of has
Thinker | February 20, 2014 at 3:02 PM |
@ Walter,
Nicely articulated position on the Barrel Trade. In light of your position for further expansion, how would Government compensate for the fall out in revenue as a result of no import duties and VAT if it were to be expanded.
Secondly, wouldn’t an expansion of this nature lead to further deterioration in Forex exchange given that we are a consuming society, and the barrlel trade is supported by a high % of barbadians shopping overseas?
Thinker,
The amount of foreign exchange allowed in the hands of Barbadians will be controlled by the Central Bank. If there isn’t enough FOREX to satisfy the needs of government and businesses, there will be none left to trickle down to individuals to allow them to shop overseas.
Any policies that could be implemented to ease the pressure from the FOREX noose around our necks should be pursued. We just will have to deal with any attendant fallout. In this case, let us assume that your perceived reduction in government revenue actually happens. Government would now have to make up this shortfall by collecting taxes from businesses and individuals who were never paying their fair share of taxes because of their positions and social connections.
@Walter
It seems you have not factored the underground or black market USD trade.
On Saturday, 22 February 2014, Barbados Underground < comment-reply@wordpress.com> wrote:
>
Peltdownman | February 20, 2014 at 4:36 PM |
“When the barrels arrive in Barbados they jam up the port, tie up the customs officers and impede regular trade.”
Peltdownman,
That’s why it is so critical for government to develop an efficient, technologically assisted system to speedily get these barrels through the system. e.g. A quick scan for undesirable items, an admin fee of $50 per barrel, and off you go.
@Walter
The amount of foreign exchange allowed in the hands of Barbadians will be controlled by the Central Bank. If there isn’t enough FOREX to satisfy the needs of government and businesses, there will be none left to trickle down to individuals to allow them to shop overseas.
@David
It seems you have not factored the underground or black market USD trade.
David, you are right. I was looking at the official FOREX receipts.
In the underground economy, the USD not used to pay for drugs and weapons, will be hoarded by individuals.
“balance,
Which part of my statement suggests that “the problems confronting us at this very moment in our history” has anything to do with Mr Tom Adams?”
Such inference can be justifiably drawn from a perusal of the entire statement below which puts his unsuccessful fiscal management actions as PM and MOF under scrutiny.
“Gabriel,
Whilst you heap praise, justifiably so, upon Tom Adams as a politician, others have the right to scrutinize him as a PM and MOF. Remember, he is the first MOF and PM to introduce Barbados to the IMF. Furthermore, whilst taking the IMF medicine he still persisted with his irresponsible and errant ways for a while, making the pace of economic recovery much slower than it had to be. He is dead, but the problems confronting us are very much alive.”
@balance
“Such inference can be justifiably drawn from a perusal of the entire statement below which puts his unsuccessful fiscal management actions as PM and MOF under scrutiny.”
@Walter
“Gabriel,
Whilst you heap praise, justifiably so, upon Tom Adams as a politician, others have the right to scrutinize him as a PM and MOF. Remember, he is the first MOF and PM to introduce Barbados to the IMF. Furthermore, whilst taking the IMF medicine he still persisted with his irresponsible and errant ways for a while, making the pace of economic recovery much slower than it had to be. He is dead, but the problems confronting us are very much alive.”
balance,
This is the justifiable inference you ought to make.
Against the background of the problems currently confronting us as a country, I was making a subtle point to Gabriel that here we are, faced with an IMF-imminent situation, and somehow he has decided to highlight a former MOF and PM whose track record demonstrates a poor handling of the type of IMF-pending situation we are in.
You will note that I only focused on Tom Adams’ dealings with the IMF.
I reminded Gabriel that the man is dead, but we need to wake up and deal with our problems which are very much alive. Therefore, there is nothing in my writing to suggest that I am blaming Tom Adams for our current problems.
Owen Arthur, David Thompson, Freundel Stuart, and Chris Sinckler are on the hook for our current problems.
Is Dr. Fred being disingenuous here since it is known that the IMF belongs to Europe and the World Bank the US? They bot collaborate for crissakes on who should run. for the respective organizations.
“Owen Arthur, David Thompson, Freundel Stuart, and Chris Sinckler are on the hook for our current problems”
Not according to Dr David Estwick senior Govt minister who has laid the blame for our CURRENT PROBLEMS solely at the doorstep of the current administration of which he is a part so who am I to say otherwise. As I try to point out, the facilitation of land from the dying sugar cane production industry for residential purposes did not begin with Mr Arthur nor did debt facilitation which like everything else would grow in costs as the costs of enhancing the development process and providing for the social welfare of the population increased through the increase in the cost of services as a result of policies/actions both domestic and external which by extension would have negatively affected our fiscal position . The crucial factor is that up to 2007, provision has always been made to adequately meet debt expenditure and thus manage the debt and this confidence in our ability to manage our debt was reinforced by Prime Minister Thompson in his acceptance speech on the conclusion of a loan agreement early in his term of office. So like wages and salaries which have traditionally been a major component of Government’s current expenditure , between 45 and 60 per cent and of which a song and dance is now conveniently made, again I reiterate Debt began long ago and was exacerbated between the fiscal periods (April -March) 1965-66 and, 198-1999, when Govt current expenditure rose from Bds $32.5m to Bds $1,332.9m and capital expenditure grew from Bds $10m to Bds 256.8m.indicating real growth over the post independence period when we were gloating over our new found middle class status and our graduation from village status to developed ( remember Bushie says rightly that life is about development) status. is nothing new but except for now it has been appropriately managed.
@ David:
Is it fair to conclude that the recent passing of the legislation to establish the long overdue Barbados Revenue Authority (BRA) would not herald the merging of the existing revenue assessment and collection agencies?
From what has been gleaned from the PM the objective of the BRA is not to replace those 4 entities but to be an ‘oversight’ or ‘overarching’ body to ‘regulate’ the revenue assessment and collection processes.
Correct me if my understanding is faulty here.
It seems the individual entities will remain ‘as is’ with no savings in administrative costs that would have resulted from the merger.
So how would the management control and reporting process be exercised?
Would the Heads of the exiting entities (CoIR, CoC, Commissioner of Land Tax and Chief Licensing Officer) be reporting to their existing Permanent Secretary or would they switch to the politically appointed Commissioner of BRA?
Why put so much power into the hands of a minister who has shown himself to be an abject failure and bold-faced liar?
Where is the money going to come from to support another parasitic politically manipulated piece of State apparatus?
What the hell is wrong with that stupid administration? Another layer of bureaucracy, and for what? Will the IMF allow this state of affairs to prevail?
I am for the BRA but only if it brings savings in administrative costs and operating efficiencies to reduce the size and cost of government; not to increase it with additional ministerial interference into the day-to-day operations of such a vital agency to help manage the fiscal challenges facing Barbados.
@Miller
Your summary does not reconcile with the recent IMF Report OR Minister Inniss publicize view. Getting a crystal view of government’s plan seems an impossibility at this stage.
Owen Arthur shows up the folly of the desperate, bullying tactics of Mia Mottley again. After Mottley made her usual political grandstanding about the Barbados Revenue Authority , Arthur came to Parliament said that he had pushed the idea from inception and was glad to see that it was being implemented.
Owen Arthur is warning this country in every subtle way he can – Mia Mottley is not to be trusted with political power and he has no confidence in her leadership.
This
Quantcast
Bajanfuhlife | February 27, 2014 at 3:43 AM |
Owen Arthur shows up the folly of the desperate, bullying tactics of Mia Mottley again”
YOUR TIME WOULD BE BETTER SPENT DEALING WITH REALITIES OF OUR PRESENT DISASTROUS ECONOMIC SITUATION AND NOT THE INTERNAL STUPIDITY GOING ON IN THE BLP WHICH HAS ABSOLUTE NO BEARING ON OUR PRESENT PREDICAMENT. OR IT MIGHT BE IN YOUR INTEREST TO DEAL WITH THE ESTWICK VS PARTY FIASCO.NOTHING AT THE MOMENT IN THE OVERALL SCHEME OF GOVERNANCE CAN BE WORST THAN A MINISTER LITERALLY HOLDING A GOVERNMENT TO RANSOM.
@Balance
Nice Try but the fact remains:
It is interesting that an opposition leader is telling Barbadians that she should be in charge, giving ultimatums and calling political meetings telling people to march and yet the man who led the BLP for 17 of the last 20 years is telling Barbadians that she cannot be trusted. That is a big deal.
I have never heard Dr. Estwick say that he has lost confidence in PM Stuart, the last statement I heard him say was that he thought he should give the PM time to study his proposals.
Arthur is telling Barbadians that he has NO CONFIDENCE in Mottley, he previously told Bajans that she is not fit for national leadership. Do not bury your head in the sand balance, not only Owen feels this way but I am reliably informed that Jerome, Kerry , George , Dale and many others who have seen how this opposition leader operates do not believe that it is in Barbados best interest to have her with political power in this country.
Let the Mottley theatrics continue while you cheer on.
If Arthur has not confidence in MAM then he needs to tell the public why.
To add to what balance posted, didn’t the Eager 11 by their actions signaled a lack of confidence in Stuart? The fact that they attracted cold feet does not remove the issue.
“I have never heard Dr. Estwick say that he has lost confidence in PM Stuart, the last statement I heard him say was that he thought he should give the PM time to study his proposals”
Well sir, I never heard the Prime Minister say that he lost confidence in the eminent Mr Estwick either but the fact remains as evidenced from the submission and obvious rejection of the proposals before and now that neither has confidence in the other.
“After Mottley made her usual political grandstanding about the Barbados Revenue Authority , Arthur came to Parliament said that he had pushed the idea from inception and was glad to see that it was being implemented.”
I do not know if you were in Parliament but Ms Mottley never opposed the creation of the Central Revenue Authority she opposed the way the voting directors of the board were appointed and she felt that it was too important an organisation for the Minister to be totally in charge of voting board appointments. Mr Hinkson also expressed this reservation but the Prime Minister made a good but superficial point in rebuttal by pointing out to Ms Mottley that because a politician is in charge of a Board did not mean that he could not be trusted. Ms Mottley never opposed the bill in principle.
poor Mia seems like she has become OSA punching bag,,,,,OSA once again has positioned himself effortlessly slithering his way back in the spotlight of leadership……
A listen to the LIAT video above (part 2) shows the disrespect/low opinion others around the Caribbean have of Stuart and tbe Barbados government. We have fallen a sorry way.