Tuesday, April 23, 2024

Road to recovery

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SINCE THE CENTRAL BANK REPORT published in early July, there has been a barrage of debate on the state of the economy of Barbados and whether we can achieve a recovery in the short and medium term.

As the governor stated in his report, “the remainder of the year is clouded in uncertainty” and none of us really knows the answers.

We are also clouded by who is making the statements. Whether it is a Government senator, an Opposition Leader, businessman or other commentator, they will put their own perspective on the situation in order to promote their cause.

Adding to this turmoil and uncertainty, the Barbados public faces an even greater “worry” in that our Prime Minister has taken ill and his prolonged recovery has left everyone concerned as to whether his illness will delay necessary action in these difficult times.

We have the largest deficit ever, as well as massive and increasing national debt – now $7 billion which is about 97 per cent of GDP, up by $1.47 billion in the last two and a half years.

Declining revenues, higher unemployment, decreased foreign investments are impacting our economy and after two years of recession, many businesses can no longer hold the strain and are on the brink of collapse.

Our major trading partners in tourism, the United States and Britain, are going through probably worse conditions than we are and therefore major signs of recovery are not apparent.

Additionally, we have a public service which is nearly 50 per cent larger than we had in the early 1990s and public expenditure which is unsustainable in the medium term with the reduced revenues that are likely to continue for some time.

Fortunately for Barbados, we are small enough and have the management capability to steer us out of this crisis.

We did it in a worse crisis in the early 1990s at great pain to the country and out of it came a Social Partnership, which has been the envy of many countries around the world.

Several of our current leaders, including the Prime Minister, Senator Darcy Boyce, Senator Sir Roy Trotman and Dr DeLisle Worrell played major roles in our recovery in the early 1990s.

I believe our current problem needs to be placed firmly in the hands of the Social Partnership.

A hint of this might be read into the Prime Minister’s 2010 presentation of the Estimates Of Revenue And Expenditure in Parliament, when he called on the business community and the trade union movement to engage in meaningful transformation, at the same time as he committed his administration to systematic reform of the public service.

We, as a nation, need to address this problem ourselves, and we clearly have the ability to do so.

Government has tabled a Medium-Term Fiscal Strategy and a Medium-Term Economic Framework and we must try to develop it into a five-year recovery plan where ACTION is taken quickly, otherwise we will probably end up like in the early 1990s again and have someone like the International Monetary Fund do it for us once more.

The longer we wait, the more painful the outcome will be.

GEOFREY CAVE

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