Barbados Economy… Next Steps

There was a time – and it still is for many – the popular management instruction was that the sole purpose of a business was to create shareholder value. For this reason financial institutions and others for decades have used this single performance indicator to determine the success of the business.

In recent years a more enlightened management theory promoted is that a company must balance the needs of ALL stakeholders which include customers, employees, suppliers and the community it serves. However from observation such a noble position is practised in the breech.

The bottomline is that business owners everywhere have expectations largely influenced by the size of the profit margin and all the flowery language in management text books will not change the thinking. Milton Friedman’s hypothesis that the only responsibility of a business is to utilize its resources to increase profits mindful of operating within the law is alive and well decades later.

In a COVID 19 world the operating and business models have been significantly compromised given the unprecedented prevailing environment. Very few companies have been unaffected. The sorry state of affairs can be confirmed in the local landscape by reviewing unaudited statements of accounts of public companies published to date. If local blue chip companies are failing to perform in the current environment what does it mean for small and medium sized businesses?

From all reports the most optimistic projection is that an effective COVID 19 treatment or vaccine will be available in early 2021. How the vaccine is distributed will then have to be prioritized. It may take several months for mass production to ramp up and distributed across the globe. The point therefore – when a vaccine is developed AND the time it takes to be distributed has implications for service and tourism dependent economies like Barbados.

At the last report Barbados is operating at 5% tourism traffic with 40 thousand unemployment claims reported to have been submitted to the NIS – the solvency of the scheme is content for another blog. The harsh reality is that in an environment of uncertainty business owners cannot effectively and effectively plan. Very few businesses after more than 10 years operating in a depressed market have access to the cash flow to ride out a protracted period of low sales activity. It means as a country we will have to find a way to stoke the circular economy. This will present a huge challenge given the fragile state of the local economy.

Surprising on an island that boast about the effectiveness of the tripartite arrangement. Head of the BCCI called out government this week. The Barbados Workers Union called out retail players. The Opposition parties and partisans to be expected are calling out government. The usual…

In this very challenging environment, Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform program, while expanding critical investments in social protection. International reserves, which reached a low of US$220 million (5-6 weeks of import coverage) at end-May 2018, are now in excess of US$1 billion. All indicative targets for end-June under the EFF were met. The targets for international reserves, net domestic assets and the primary balance were met with some margin, which bodes well for meeting the end-September EFF targets.

IMF Staff Concludes Virtual Visit to Barbados

The parliament of Barbados is scheduled to resume on September 15, 2020 after prorogation. All of Barbados anticipate government’s strategy to lead the country in the short and long term will be made known when the Governor General delivers the Throne Speech. What this blogmaster knows is that once COVID 19 exist and global travel remains a trickle earning foreign exchange in the short to medium term will be impossible in significant amounts. A plan how we produce and consume must be high on the agenda. COVID 19 confirmed what many have been advocating for a long time. We need to fashion an economic model that is sustainable given the means of production located in our domain.

It is not all doom and gloom as the recent IMF Staff report concludes. We are meeting targets!

364 thoughts on “Barbados Economy… Next Steps

  1. We should stop blaming our government for the economic misery. Sure, Greendidge is not very convincing … But what should he do differently? We only had one viable industry and it is now dead by 2021/22.

    Still, I am glad. It has never been so quiet on our island. No bush drums and loud music as usual. Bridgetown is very pleasant because you can shop there tax-free. Especially the Rolex store is great: they sell very popular models without waiting lists and about 20 percent cheaper than in North America and Europe. So I advise everyone to simply buy a Rolex in Bridgetown during the crisis, leave the watch for ten years in a climatised room and then sell it at a premium.

  2. Mr Skinner you wanted to hear from Mr Prescod hoping he would upset the apple cartLike you Mr Prescod is no political heavyweight and came to the realisation that he was serving at the pleasure of Ms Mottley.Now he has gotten a new pick and seems happy you still wish to hear from him i doubt it.Ms Mottley will deliver the throne speech and we will see where we are going np need for idle speculation as it helps no one.

  3. @HA
    In the printed words of the IMF, December 2019 saw the COMPLETION of the Barbados external debt restructuring.
    Whether Completion means ‘Full and Final’, I have no idea.
    Based on our trade dealings with the USA nothing is ever full and final. One is simply guided by the most current ‘dispute resolution’ clauses, when one party ‘contravenes’ the agreement.

  4. @ William

    You are holding out a lot for the Queen’s Speech. I am always confused why Barbadians are so fascinated by qualifications. All a PhD means is that one submits a proposal to a university to research a very narrow area of a given subject and commits to write no less than 40000 words within three years on that subject.
    In real terms, that works out at about 40 words a day. What would be helpful is if the PhDs tell us what their theses were. There should be copies in the library at the UWI. A taught MSc/MA is more intellectually challenging than most PhDs. I like the idea of people telling me what I am and am not qualified in. Comes as news to me.
    Let us move away from nonsense and get back to reality, discussing ideas. Why are the highly paid people at Cave Hill not joining in this public debate?

  5. William Skinner September 1, 2020 7:09 PM

    Questions for the apologists and obstructionists:
    Was Grantley Adams a trained economist?
    Was Hugh Gordon Cummings a trained economist?
    Was Errol Barrow a trained economist?
    Was Tom Adams a trained economist?
    Was Bree St John a trained economist?
    Was Erskine Sandiford a trained economist?
    Was David Thompson a trained economist?
    Was Freundel Stuart a trained economist?
    Is Mia Mottley a trained economist?
    So therefore if only trained economists are to believed why should we have believed or believe who we have elected to lead us.
    So by the current argument if my Prime Minister comes and tells me that our country is not going well and Greenidge ,Mascoll or Persuad come and tell me differently, should I dismiss my PM because she is not a trained economist? {QUOTE}

    @ William Skinner you talking bare ignorance.

    All the prime ministers if they were trained economists or not had the ministry of finance that full of qualified economists to help them. Then they does make they own political appointments, just like how David Thompson and Freundel Stuart had economist Frank Alleyne as head of some economic advisory committee that help them formulate policy and advise them what to tell the public.

    So them prime ministers does just be repeating what the people in the ministry and them political advisors tell them to say.

    I prefer to hear from them than from some idiot who claim to fame is that he do a few one day seminars.

  6. RE There should be copies in the library at the UWI.

    A taught MSc/MA is more intellectually challenging than most PhDs.

  7. A taught MSc/MA is more intellectually challenging than most PhDs
    @Hal Austin this is false.
    But I agree with your view that Bajans are eerily fascinated with credentials rather than the ability to get the job done.

  8. Mr Skinner if i had the choice of whose advice i would follow between Hal Austin , Greene, John A and you as against Mr Kevin Greenidge a highly trained economist working at the IMF who do you think i will choose? It is a no brainer Dr Greenidge every time.Most of you so called experts never run a bread shop far less a country.

  9. Working at the IMF is a code for doing the bidding of the white master and that is exactly what Greenidge job entails
    He must sing for his supper meanwhile barbados social and economy environment is battered and torn and not one word is said about the lives of barbados household coming out of Geeenidge mouth
    What do i want him to say i tell you
    Tell the IMF chief that barbados is more than an economy it is a society and the people lives has been stretched to the bare bones
    Also those feel good news reels dont feed hungry bellies

  10. Mariposa your shite talk about Barbados is more than an economy it is a society is the reason why we are in the hole we are in today.Mr Thompson in trying to achieve his lifelong ambition to become Prime Minister of Barbados came with this slogan back in 2008 .Then not having a clue what he was doing drained the life out of the economy with his first budget.Then between himself and Mr Stuart proceeded to run down the economy tojunk bond status.Therefore jackass without a strong economy there can be no society.This government has the task of pulling the country oit of the hole ypur dems left through gross incompetence.Unfortunately, the progress being made was knocked down by Covid 19 which no one could have predicted. However i am quite congident with Ms Mottley at the helm we will recover in time as it will not be an overnight fix.

  11. @Lorenzo
    I suspect that you are in the group that never run a breadshop and the BDLP is praying that you never run the country.

    Just had to tickle yah.

  12. Lorenzo
    Thompson words spoke to truth
    Reason why barbados is in the hell hole is because your govt decides to throw the poor under the bus to appease the needs of the rich
    OSA sold the best real estate to the highest foreign bidders land that is now out of reach to bajans
    Mia rob the pensioners to appease the greed of foreign collection agency called the IMF
    Also decides it best to give tax breaks and tax waivers to big business in return for nothing
    What does she give the bajan household in two years nothing
    but ownership to the debt laden basket

  13. Mariposa tell us what help the poor people got when the Dems laid off over four thousand just after 2013 some including husband and wife from the same household?Then for the the ex PM to ask if persons knew the meaning of temporary? You remember any of this hyprocrite?Maybe you remember when ex finance minister Mr Sinckler was killing poor bsjans with taxes?You were not concerned with poor people then as you were to busy defending the dems as ac back thenYou are a deceitful hyprocrite who reminds me of the idiotic Ms Undecided who makes a lot of wild statements and when challeged like you cannot support them with any evidence.Take a break like me you need it.

  14. OSA sold the best real estate to the highest foreign bidders land that is now out of reach to bajans (quote)

    Mari, tell we where all the best real estate that you say OSA sell to foreigners was located?

    It can’t be people land he sell, because that is private property, unless you want to say that the government compulsory acquire the people land and sell it to the foreign bidders you talking bout.

    If not, it would have to be government land he sell. So tell we wuh part all this land is.

  15. OSA sold the best real estate to the highest foreign bidders land that is now out of reach to bajans (quote)

    Mari, tell we where all the best real estate that you say OSA sell to foreigners was located?

    It can’t be people land he sell, because that is private property, unless you want to say that the government compulsory acquire the people land and sell it to the foreign bidders you talking bout.

    If not, it would have to be government land he sell. So tell we wuh part all this land is.

  16. Persaud insisted he was unable to give details of the plan at this stage, but said it was very much focused on reengaging workers and creating “new green investment plans that will transform our sector and move it towards a fully renewable and conserving sector”.

  17. Demystifying Throne Speeches
    By Ezra Alleyne

    In the upcoming Throne Speech, the Mia Amor Mottley administration will produce a speech to be read by Governor General Dame Sandra Mason during the ceremonial opening of Parliament after its prorogation.
    Ceremonial openings of Parliament and in particular, Throne Speeches, are confusing to some people. On such occasions, the Monarch or Governor General reads a speech written by “the Cabinet” politicians and describes the Government as “my” Government.
    It would not surprise me if during the speech, puzzled listeners in the safety of their homes, mutter in hushed tones: “But isn’t it Mia’s Government?” and reflect on the Mighty Gabby’s calypso West Indian Politician
    which declares “ because you train in England, Westminster choking we”.
    The simplest, most authoritative explanation I can find for this contradiction is in the writing of Walter Bagehot, a barrister and journalist of high intellectual calibre, who as far back as 1867, sought to demystify these matters. Bagehot wrote the now famous and well read book entitled The English Constitution.
    It is a classic.
    Centres of power
    Bagehot wisely suggests that to understand the system (my paraphrase), we should not be fooled by constitutional theories, but should instead concentrate on the real centres of power and the practical workings of the system. Good advice to some extent!
    Okay, so let us see how and if this explains the idea of a Throne Speech. Now, in theory and in law, Her Majesty the Queen is our Head of State. In theory, the Executive power is reposed in her hands. In actuality, political realities locate functional power in the Prime Minister and her Cabinet. The Constitution says so. Bagehot recognised this truth.
    In other words, careful observation of political realities, and locating the centres of power, will simplify matters that mere theoretical statements do not.
    What was crucial, he insisted, was to understand the difference between the “dignified parts” of the Constitution and the “efficient parts”.
    The former, the monarchy (and pomp and pageantry – my words), prorogation and dissolution of Parliament, things of that sort, “excite” and preserve the reverence of the population. The latter, (Prime Ministers, Cabinet, Legislature and the Public Service) are “those (parts) by which it (the constitution) in fact, works and rules”.
    Mind you, Bagehot admitted that they (the parts) were not separable with microscopic accuracy, but he demystified the issue.
    Critical gelling
    Yet, the Throne Speech exhibits a critical gelling of the dignified part of the Constitution with its efficient counterpart; such a functional arrangement having been hammered out on the altar of political compromise here (1937, 1946, 1951, 1966) and there.
    Given the current economic turbulence and the need for this prorogation and a necessary Throne Speech, the efficiency of the public service (an efficient part of the Constitution) in crunching the numbers for the policy-makers was crucial background for the speech.
    But our technocrats in the Ministry of Finance and Economic Affairs have an established institutional reputation for accurate forecasts.
    In 2006, external experts admitted that the local technocrats had more accurately forecast the performance of the economy for 2005, than their own. Yet another feather in the local cap.
    Hear this now. In 1989, a major dispute broke out in the Estimates Debate in Parliament between Prime Minister and Minister of Finance Erskine Sandiford and former Minister of Finance (1986-1988) Dr Richie Haynes. The issue – the accuracy of their revenue forecasts as ministers of finance.
    In defending his (inaccurate) forecast, Haynes pointed out that the actual estimated forecast collection of income taxes had been topped up, not by the technocrats, but by the Cabinet of the day after interventions by Errol Barrow.
    As a result, the more accurate forecast of the technocrats did not see the light of day. It had been changed at Cabinet, and replaced by another figure which was presented to the House of Assembly, as a genuine estimated collection of revenue. That altered figure was
    almost double the actual results. What a thing!
    Haynes’ account was challenged by other members of the then Cabinet, who declared that they could not recall any such interference. Whatever the issue, that shortfall in revenue probably contributed significantly to the early 1990s’ economic crisis.
    We anticipate that as usual, highly expert technocratic advice featured as an essential part of the background to this Throne Speech.
    Ezra Alleyne is an attorney and a former Deputy Speaker of the House of Assembly.

    Source: Nation Newspaper

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