Economist Marla Dukharan’s Advice to Barbados, ‘Pick Your Poison’
It is the opinion of BU the resonance of economist Marla Dukharan’s with the local population is not because she brings any fresh analysis to the fore. The reason is because she is perceived as an independent voice to be trusted. Her lucid commentary on local and regional economies which started when she was Chief Economist for the RBC with responsibility for the Caribbean has exposed a growing belief that several of the home grown economists have allowed themselves to become compromised by the lure of lucre from the political and economic class.
On the 23 August 2017 the Institute of Chartered Accountants of Barbados (ICAB) hosted a session which featured Marla Dukaran as the main speaker, the topic was Home Grown or IMF: What should Barbados’ economic recovery plan look like? From all reports it was a constructive session that served to reinforce the view among the professional class present decisions being taken by the government will not steer the country away from the economic precipice we continue to rapidly approach.
To give wings to the view that the Democratic Labour Party (DLP) appears to be focussed on the political dimension to how we manage a tiny island is to review the agenda and resolutions passed at the just concluded DLP annual convention. Two items carried in a resolution was for the political party- that forms the government by the way- to issue a communication to Attorney General Adriel Brathwaite to investigate the qualification (or lack of) of Mia Mottley to practice law in Barbados AND the use of wire tapping equipment by former Commissioner of Police Darwin Toppin supported by you guessed it, Mia Mottley. Sensible Barbadians are left to wonder why has it taken the DLP until the end of its second term to force these two issues to earlier resolution. BU’s position is not to defend Mottley or Dottin of wrong doing, it is to find the government guilty for politicising the matter IF there is credible evidence to support the charges. Didn’t Prime Minister Freundel Stuart promise to share the contents of the FBI file that has mysteriously disappeared? What about his reference to a list of CLICO investors he also promised to release? #JAs
To the credit of ICAB they brought in Marla Dukharan to focus on an anaemic performing economy while the entity charged with managing the economy took a decision at its annual conference to focus on issues not related to the economy. What the juxtaposition shows is that in civil society the citizenry, this includes Non Governmental Organizations (NGO), must continue to find ways to inform the public so that tension is brought to bear on policymakers to make the best decisions in the interest of the wider public.
What did Caribbean Economist Marla Dukharan remind us?
Barbados has been recording fiscal deficits averaging 5.4% in the period 2000 to 2017. It spiked to 10.4% in the fiscal 2013/14 and as dipped to 6% in 2017/18 on last report. In stark contrast for the same period growth has averaged 1.1% with a -0.1% decline in 2013/14 easing up to 1.6% growth in the current period. The point Dukharan emphasized is why with the billions in government sending it did not significantly move the growth indicator.
Barbados recorded the lowest fiscal multiplier compared to five other major Caribbean economies i.e..Jamaica, Trinidad, Guyana, Suriname and Bahamas. The fiscal multiplier is defined as the growth generated based on government spend.
Debt sustainability threshold is noted at 55/60% of GDP. The analysis supports that a greater number has a negative impact on growth. It is a matter of record that Barbados debt to GDP is far north of 100%.
The monetary base has increased to almost 5 times, close to 5 billion from 2000 to 2017. The will obviously stress foreign reserves given the island’s high conspicuous consumption fueled by imports. The proof is in the fact foreign reserves of abut 300 million in 2017 are at 2000 level.
The solution can be linked to the expression offered by Mara Dukharan, Barbados will have to pick its poison. And it does not matter if DLP or BLP wins the next government.