Everywhere Barbadians on the Rock turn we are being bombarded by talking heads on the economy economists included. Many have forgotten it is the economists who are mainly responsible for the economic policies which have helped to wreck our economies.
After about six years of a stalled economy Barbadians are being warned to brace for more hardship to be delivered in the ‘Budget’ promised in a few weeks. We are told an IMF document has been circulated to stakeholders for comment, a process anchored by a 3-man committee headed by retired Permanent Secretary William Layne. One important stakeholder, the public, is left to speculate the full content of the IMF document. We have become so use to NOT being embraced in the process by our government, it provokes little or no response by the majority of citizens.
BU’s position is consistent. If there is no confidence shown by key stakeholders in the economic policies of government we will go nowhere fast. A further point: all the focus is being placed on tweaking fiscal and monetary policy to reposition Ship Barbados but nothing about a change in the conspicuous consumption behaviour of Barbadians. Nothing about aggressively incenting export led projects. After the ‘pretty’ talk the Barbados economy is driven by consumption behaviour which soaks up scarce forex. It makes good sense to improve efficiencies how we do things in country to benefit from the cost savings but we have to earn foreign exchange to pay our bills if we want to maintain a reasonable lifestyle.
According to Minister Sinckler the plan is to widen the tax base. The Barbados Revenue Authority (BRA) was established to improve tax collection; a work in progress. The NIS does not fall under the ambit of the BRA but is known to be a state entity owed millions by a cross section of Barbadian individuals and businesses. So far the government seems comfortable squeezing a contracting tax base and and leaving the hatch open for tax defaulters.
The gurus appear to be fixated on a program of Internal Devaluation (ID) to protect the fixed peg. All the tell tale characteristics are present, cut public expenditure comingled with other austerity measures. An ID strategy is useful if it translates to Barbados becoming more competitive and generating GROWTH!
What concerns BU is the lack of a fiscal strategy which is driven by a philosophy by the policymakers. Our policies appear to be anchored solely to reduce the deficit the consequence of which are negative externalities. There is rising crime and lawlessness, volatile industrial relations climate, lack of confidence by key stakeholders in society, a deterioration in health care to name a few.
An acceptance of the IMF recommendations will continue the pillage of the middle income Barbados, the result, reduced aggregate spend. A significant number of Barbadians are mortgaged to the hilt and with disposal income being targeted will have to sustain current lifestyle by drawing down on savings or utilizing credit. There is the commonsense option to change consumption behaviour but how does a generation intoxicated by the 80s boom make the adjustment?
This week the region received the news Scotiabank will be shrinking operations in the region, a good indicator of the uncertainty at play. BU has not forgotten the pessimistic view delivered by Governor of the Eastern Caribbean Central Bank in Barbados a few weeks ago. Our leaders, our people appear to lack the innovativeness (there is that word again) to kickstart our social and economic engines required to build a ‘prosperous’ society in a world which has changed in the last 10 years.
The blogmaster invites you to join the discussion.