Economic Review of Economy – January to June 2019

Governor of the Central Bank of Barbados Cleviston Haynes delivers the Central Bank of Barbados’ review of Barbados economic performance in the first half of 2019 and takes questions from members of the media.

Central Bank Website

 

Click to read text of Barbados Review of the Economy January to June 2019.

136 comments

  • “Let us see how the Governor and WO resolve the issue. We must be confident they have a plan. They are being paid big Rh bucks.”

    Sounds to Wily like someones been eating excessive amounts of liberally soaked RUM CAKE or just plain cheap Bajan rum.

    Liked by 1 person

  • A

    Where in Lorenzo is there any mention about any party?
    To me the person that is bring anything about party into this blog is you (6:26pm).

    Touchy touchy lol

    Like

  • It is obvious that 80 % of this forum is fed with contributions by DLP bureaucrats, 15 % by the welfare state and only 5 % by neutral observers (like me).

    There is no other explanation for the fact that everyone – including John A and The Legende – is so afraid to plead for the necessary reform of the civil service apparatus, i.e. a reduction in the number of staff. They write for the civil servants and tell the civil servants tales about Fantasia.

    Sentences like “We only have to make the bureaucracy more productive, then we don’t have to dismiss civil servants” testify either to total naivety or ignorance of the processes in an administration, or to great populism, which deliberately turns a blind eye to the truth.

    If the government simply sent 50% of the public servants home, but continued to pay them, much would already have been done. We would then have 50 % less sabotage and 50 % less bureaucracy, which obviously suffocates any economic activity like a carnivorous climbing plant.

    Liked by 1 person

  • @ Tron.

    I agree with you the civil service needs to be addressed. If you recall a while back I said that all of this increased taxation could of been avoided if we had reformed the indirect taxation system and addressed the civil service.

    If you recall The PM said she did not intend to place the burden of restructuring solely on the backs of the civil service as previously was done, hence she chose to tax tourism and everyone else so as to avoid the burden falling on the civil service alone.

    I still believe we have a civil service that is way too big for our current economy but if government sees it differently that’s their call.

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  • Thank you very much for your reply, dear John A. We seem to be looking at things the same way.

    I just cannot understand what is meant by our Prime Minister’s statement that officials have borne the brunt of the reforms over the past 10 years. Chris Sinckler’s refusal to raise salaries was justified because there was no increase in administrative productivity or any economic growth. Strictly speaking, Sinckler would have had to cut salaries sharply or dismiss 10,000 civil servants. That he didn’t do that was a privilege for the officers, not a burden.

    As you can see, I am trying to be completely impartial here.

    Liked by 1 person

  • Tron it boils down to laying off persons in the civil service
    is always seen as a last resort by politicians. They use the argument that’s says if they lay off more people the economy will slow further, but they always avoid the discussion about what size civil service can our economy sustain. I don’t think any study was ever done that says based on an economy valued at X dollars, the largest civil service payroll must not exceed Y dollars for example.

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  • Dear John,

    Some here refer to the high level of government spending in Scandinavia. But the conditions there are quite different, e.g. transparency, corruption, labour efficiency, etc. It is also always forgotten that Sweden massively dismantled the welfare state in the 1990s. Norway is a special case because it has a lot of oil. Personally, I would choose Switzerland or Singapore as role models, as both countries are resource-poor and offshore financial centres.

    We don’t have to thin out the bureaucratic machinery overnight. We should have started 2008 with a 10-year plan: (1) only minimal new hires, (2) early retirement, (3) severance agreements. In return: (1) increase in weekly working hours, (2) 20% reduction in basic salaries, but bonus based on performance, (3) simplification of salary structures with flat structures and fewer administrative units. This would have made the whole process socially acceptable. Waiting every year increases the danger of an abrupt, large wave of layoffs.

    Liked by 1 person

  • Worth reading.

    KRYSTLE HOWELL wrote ” Permanent write-offs should only be granted to those companies that are no longer

    financially viable or no longer exists.”

    https://www.nationnews.com/nationnews/news/241199/krystle-impact-writing-vat

    Liked by 1 person

  • David
    15 months be patient. The people talking about no growth strategy in BERT seem only au fait with one approach to growth. Here is a hint, what transformative policies/processes are being put in place that would facilitate growth? Jeremy voted for Estwick two or three times prior to 2018.🤫🤣

    Like

  • @enuff

    He voted for Estwick or was it the UAE plan.

    Like

  • How is it possible to grow an economy when our government is incapable of providing an efficient public transport system. If we lack the capacity to transport workers from their homes to their place of work then our economy will continue to regress. This is evident.

    I was in London over the weekend and travelled to several locations effortlessly and cheaply. It was a pleasure.

    Make the public transport system priority number one. You will be surprise with what effect this will have on the local economy.

    Liked by 1 person

  • @TLSN

    The optimists must tell us where the growth is going to come from. Or will it happen by magic?

    Liked by 1 person

  • David
    Estwick! Question, is the government/WO suppose to just give in to the external creditors’ demands? Some here are so driven by ego they just gum bump. #egofowlism

    Like

  • @enuff

    As you have read we have shades of opinions. Some believe the government should not have defaulted.

    One must pay your debt!

    Some suggest the government must hurriedly close the deal because it is negatively impacting our reputation with foreign investors.

    Etc etc etc

    Like

  • @ Hal,

    We have to be positive. There are many talented people in Barbados. I believe that you may have watched the Aljazeera link (currently listed under top clicks) which highlighted that we are not short of practical citizens who have the drive, creativity and ambition to succeed. William Skinner has over the years listed at least ten areas where Barbados industries and individuals may thrive if given the opportunity.

    Our road block has always stemmed from our weak party political system. Mia would make a fantastic ambassador and a figure head similar to our queen (Elisabeth). However, she and her party and the previous regime blunted the mindset of the local population. For the good of the country I would like to see Mia step down and I would like to see the abolition of our two major political parties.

    The exploitation of solar energy has to be an industry that we should be developing and investing in.

    Like

  • @TLSN August 12, 2019 4:50 PM

    I was in London over the weekend and travelled to several locations effortlessly and cheaply. It was a pleasure.

    I was in London the last quarter 2017 and I didn’t find transportation to be cheap.

    Like

  • Here is a hint, what transformative policies/processes are being put in place that would facilitate growth?

    More PR nonsense-speak meant to bamboozle the blind.

    What does that gobbledygook mean? The fact remains that this gov’t just like the last is totally bereft of any ideas to drive the society forward. It has resorted to spin and corporate PR jargon to appear to mask their own incompetence.

    Like

  • @ David August 12, 2019 5:15 PM

    What should be also of major concern is the accumulation of interest charges upon the
    already overdue loan interest payments which would make the settlement much more disadvantageous to Barbados with its growing incapacity to generate new sources of foreign exchange.

    Would it be misleading to say that the Governor of the Central Bank, in his recent report, recommended that Barbados look for another industry to replace the almost dead sugar industry with the suggestion that cultivation of marijuana is the ‘preferred grass’ to replace sugarcane?

    How can this backward-looking government talk about growth and ‘democratization’ of the economy when it is about to pass legislation to allow the sale of medical marijuana to be imported by just a chosen few?

    Why can’t the ‘weed’ be homegrown to act as the fillip for growth and development of cottage industries including the production of marijuana for the pharmaceutical sector?

    Is the well-connected (and financially influential) local lobby for alcohol production and sale driving the government’s decisions regarding the decriminalization of the production and use of marijuana?

    Why must Barbados continue to waste the already scarce foreign exchange by importing marijuana under a cloak labeled: For medicinal purposes only”.

    Isn’t the Bajan brand of organic ‘Bush Tea’ not good enough as a treatment for the cancerous-like spreading of NCD’s?

    Like

  • @Miller

    Which Bill is slated to be debated tomorrow in the lower chamber?

    Like

  • @ David August 12, 2019 6:27 PM

    Isn’t it the so-called Medical Marijuana Bill?

    How can an administration which promised a new path forward propose such a piece of backward looking legislation when the local cultivation of cannabis sativa remains a criminal activity?

    Isn’t this analogous to Barbados allowing the importation of rum but making the cultivation and processing of sugarcane a criminal activity the same way the old plantocracy system banned the growing and sale of ground provisions (food) in Bridgetown by the ‘freed’ slaves even before emancipation?

    Who are these “doctors and pharmacists” to be licensed in order to prescribe and dispensed the imported ‘processed’ marijuana?

    What can these university-educated quacks do that any experienced herbalist from the Rastafarian community cannot prepare and offer for sale?

    Why does Barbados continue to make itself look so backwardly stupid and enjoys being the medieval-thinking laughing stock of the Caribbean?

    If Barbados could have been so avant-garde in promoting the rights of women including the passing of the Medical Termination of Pregnancy legislation why not apply similar foresight to the cultivation and use of marijuana?

    Like

  • @TLSN

    Don’t forget what happened with the solar energy ventures. They were encourage to expand into this area only to then have their production capped. Taxes were then put on systems and after all the long talk, government did not step in and ensure that those putting energy back into the grid got a fair price for it.

    If we are going to encourage an area like this to save hard currency then we can not adopt a hot and cold approach to it.

    To me saving foreign exchange has the same net effect on reserves as earning foreign exchange. We should therefore give both areas our full support.

    Like

  • @ John A August 12, 2019 7:51 PM
    “If we are going to encourage an area like this to save hard currency then we can not adopt a hot and cold approach to it.
    To me saving foreign exchange has the same net effect on reserves as earning foreign exchange. We should therefore give both areas our full support.”
    +++++++++++++++++++++++++++++++++++++++++++++++++++++

    Excellent point, John A!

    But you have to remember that government ‘earns’ a large slice of its indirect tax revenues from the importation of finished petroleum products.

    If the government were really serious about “saving foreign exchange” it would impose a relatively large ‘cess’ on the consumption of imported stale water in plastic bottles.

    Why talk about the good quality of the Bajan coral-filtered water produced by the BWA when the owners of the same BWA encourages the importation and consumption of other countries’ stale water taken from taps and put in disposable and environmentally-destructive plastic bottles.

    Like

  • @ Miller

    That is why I say we have to make some decisions that will require a different way of thinking by those in power.

    In other words would government be willing to sacrifice the taxes on fossil fuels so as to encourage a lower dependence and save hard currency on said fuel sources? Will we un-tap the full potential of solar and offer preferential duties on electric cars say, at the cost of losing taxes at the pump?

    Really what is our long term plan on issues like these? I am waiting to hear from our leaders on such matters.

    Like

  • Chasing Opec dollars ?

    ” Prime Minister Mia Mottley has asked a funding agency of the world’s oil producers to finance it.”

    Any comments from the BU intelligentsia ?

    Like

  • https://barbadostoday.bb/2019/08/09/mottley-plan/

    “And the would-be development partner, part of the Organisation of Petroleum Exporting Countries (OPEC) has signalled its willingness to accept a proposal to lend money for the project.”

    Like

  • I ignored my debts and I was a rich and happy man.
    I included my debts and I was a sad man,
    ‘It is a foolish man who plays smoke and mirror with himself.

    Like

  • For those who missed the last newsletter from former governor of the central bank have a read. Discussed to death in this space.

    DeLisle Worrell: Public Sector Reform Begins With the Timely Publication of Annual Reports

    https://www.caribbeansignal.com/2019/08/12/delisle-worrell-public-sector-reform-begins-with-the-timely-publication-of-annual-reports/

    Like

  • Love him or loathe him, Dr W is one of the few who continues to put forth well reasoned positions. Albeit he could have penned this 4 years ago, and it would be as relevant as it is today.
    So you take a person who has been senior, and recently the most senior employee at the NIS, where we haven’t seen an Annual report in eons, and promote them to Director of Finance. What message does this send?

    Like

  • the CB report is as expected. lower debt through default. higher reserves through borrowing USD and not repaying foreign loans. no growth. if we havent been able to grow our economy in 30 years despite massive govt stimulus through deficits how do we expect to grow it now? we should not have defaulted on local nor foreign loans, we will pay the price when the imf lets us try to borrow again, both locally and foreign. for all the pain we will still have to set the value of our $ at a price that makes sense. the usd is killing us. a revaluation that reflects the GBP and euro is absolutely necessary and will happen sooner or later, unless the usd falls sharply (very unlikely). we also need to stop all of the subsidies both to the state owned enterprises and the private sector. who cant make money should go out of business, including the 0 tax on “selected” tourism projects. remove all of the taxes that distort our costs, like the 3x the real value of a car and food. cut the civil service to the bone. productive workers will be able to afford a house if they pay less for cars, food and wasted taxes. it will be a painful transition to a real economy, one that rewards productivity, but will have to happen eventually. i say the sooner the better. imagine i can drive up to a window at a fast food restaurant and they will quickly and with a smile take my $5, but to pay govt tens of thousands in taxes i need to find some obscure building, take 15 min to find a parking spot, climb some stairs, then spend another hour in a line in a poorly ventilated packed room. wtf. we cant change the civil service we have to dismantle it and start over.

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  • @BA

    How does your suggestion square with the neoliberal ideology we practice in this part of the world?

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  • my views are based in reality

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  • I was in London the last quarter 2017 and I didn’t find transportation to be cheap.(Quote)

    Was that London, England? Travel on public transport (buses and trains) in London is £1.50 for the first hour and a daytime travel pass is £6.50 and no more than £11.50 for all day travel.

    Like

  • @ BA

    You are correct. But reality is not the same as the Barbados Condition. What passes as government policy is also bad business economics. If government continues to subsidise zombie businesses, what they do is prevent new companies from emerging. Think of the computer sector. It is a perverse policy.
    What it does reveal is the extent of capture of government by the private sector as is reflected in the bogus social partnership. I attended a meeting of the social partnership once held at the BWU and it was farcical. One person impressed me at that meeting.
    Barbados is a failed state.

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  • “Stockholm syndrome is a condition which causes hostages to develop a psychological alliance with their captors during captivity”

    our govt has convinced too many that they are on their side, while the opposite is true. first the govt takes the maximum currently available revenue in taxes, most taxes are hidden from low wage earners, like import duties, then borrows (taxing future generations), and then says, because you are incapable of supporting yourself, vote for me and i will give you a free house, well not give but lend, therefore removing the only source of wealth building most people get the chance at. and we wonder why our people cant seem to build wealth and escape poverty generation after generation. we are not a failed state yet, that would imply a chance at a new beginning, we are a captured state, captured by politicians and civil servants, that we feel we need and are the solution to our problems, when they are in fact the problem.

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  • BA

    A failed state is one in which the key institutions of democracy do not work efficiently. Again you are right about building wealth. Home ownership has been the driver of household wealth since the 19th century. Not a single Barbados government, DLP or BLP, has ever made home ownership a priority. In the UK (65 per cent) and US (70 per cent) of homes are owner-occupied.
    In Barbados we have the perverse policy that if a land/home owner is overseas, even if s/he s paying the land tax a squatter can occupy the land and after ten years lay claim to it.
    This is barbarism. What is worse is that the water authority and electricity board will then run services to these properties without the land owners authority. With paper records, rogue workers in the land tax and land registry can easily change the names of documents. Barbados is a failed state.

    Like

  • “Mobile phones are replacing bank accounts in Africa
    Networks of agents have brought financial services to millions of ‘unbanked’ people, and there’s still room for growth.”

    https://www.aljazeera.com/ajimpact/mobile-phones-replacing-bank-accounts-africa-190813101049937.html

    Like

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