We in Potta
Our main problem is not finance, it is the availability of markets for what we produce. It is the closing of these markets that caused the decline in jobs,foreign exchange and income. Just in case we are losing focus. Is stimulus money a medium or long-term solution? It is a short term inadequate remedy. It buys time for the economic agents to regroup and re-calibrate – Vincent Carrington
This blogmaster was hopeful the COVID 19 global disease would have served as the great disrupter many of us have been waiting for. That is, to force behavioural change necessary to efficiently manage our little economy to support a decent standard of living for our children and those to follow.
Last weekend Larry Summers a former US Treasury Secretary was asked to comment on COVID 19 impact on the economies of emerging and developing countries. He responded (in summary) that these countries will need significant financial assistance from international financial institutions. High debt burden carried by developing countries does not leave fiscal space to adequately finance policy development. He elaborated that emerging and developing countries will have to cooperate to create the perfect lobby in order to attract assistance. It brought to the blogmaster’s mind that some good may come out of the investment by Prime Minister in raising the international profile of the country and region.
Countries have had to react quickly to a global economy forced to come to a screeching halt because of COVID 19. Finance ministers everywhere have had to reallocate scarce resources to fight the pandemic. What is scary for the developing world is that CHINA, USA and Europe responsible for fuelling the global economy have been significantly affected by the novel coronavirus. Unlike developing countries these three countries have access to financial resources to combat fallout from the pandemic.
The interdependent nature of the global economy – to Summer’s point – makes it a priority for the developed word to assist developing countries by suspending debt payments AND to consider debt forgiveness. The usual criteria of per capita income used by international agencies to ‘graduate’ needs to be jettisoned and replaced by more realistic economic performance indicators. How can a country like Barbados not qualify for significant debt forgiveness given the vulnerability of our small open economy? The global economy will not recover if markets in emerging and developing countries are left to flounder.
One does not have to be a sage to know Barbadians will have to be sensitized by our leadership to the unprecedented challenges facing countries like Barbados because of the pandemic. The lack of financial intelligence and economic planning currently being demonstrated by local actors continues to be a big disappointment. Almost every intervention and commentary seem to be crafted to be political or anchored in the same old same old rhetoric. Frankly it has been a struggle for this blogmaster of late to feel motivated to blog.
Does anyone besides a few – understand the implications of a country like Barbados already suffering from a decade of economic fatigue – the implication of depleting reserves or drawing down on hard to source lines of credit to fight COVID 19?