THIS WEEK our country continues to mourn the passing of our late Prime Minister, and after several days of lying in state, Mr Thompson’s body will finally be interred in St John’s historic churchyard after a funeral service at Kensington Oval.
The Prime Minister’s death affected most Barbadians at a deeply personal level, and therefore it is difficult to say when the nation will feel whole again.
However, the world has not been sitting still, and the day before Mr Thompson passed away, Standard & Poor’s, the powerful ratings agency, downgraded Barbados’ public debt to BBB-, just one notch above junk bond status, while maintaining its outlook at stable.
But it warned that the rating could drop again in six months if promised measures to rein in the economy are not implemented.
We could point out that our Government has essentially been frozen in place since the leader we bury this week was taken ill on the verge of a Budget or economic policy statement that would have homed in on the general commitments made in the Medium Term Fiscal Strategy (MTFS) document hastily put out by the administration early in the year.
With input from the National Consultation on the Economy, hosted each year by Government to bring the public and private sectors together, Mr Thompson was preparing to synthesise what had emerged from the conference and private meetings with the social partners to present a Budget that would have addressed the way forward to restore our economy to long-term positive growth, reduce our national spending, and promote inward investment.
Decisions impossible
Unfortunately, this was not to be, and due to the factors surrounding the illness, including repeated visits to seek medical attention abroad, it became impossible for the economic and financial decisions that were needed to actually be taken.
The situation is so dire that last week this column suggested the possibility of a national consensus on the way forward, so that both major parties could take the tough steps they know are necessary without getting ambushed by the other during the coming Budget debate.
I have been told that this is political fantasy, so I will move on, but there is no denying that our economy is in its most fragile state in decades.
This might help explain the sudden response from the Central Bank of Barbados to the S&P statement. Did somebody hit the panic button?
First, it arrived at my inbox at 8:23 p.m. as part of a group email to the media, so I guess the idea was to try to get it into the Saturday news cycle rather than Sunday’s.
The release I got was not on a Central Bank letterhead and was simply headlined, Barbados Maintains Investment Grade Status Despite S&P Downgrade.
The actual file was also curiously titled, sounding more like an old-time cable, as follows: October. Standard. Poor’s.
Besides the look of the bank’s release, which seemed to me hastily done and poorly presented, the tone was rather hurt, with a “we-told-you-so-but-you-wouldn’t-listen” flavour, and noted among other things that only a few days before, in his third-quarter Press conference, Dr De Lisle Worrell had said that in addition to the cuts prescribed in the MTFS, “Options being considered were further spending cuts or increased taxation.”
I had not been able to attend the Press conference and I must also have missed the headline that undoubtedly would have read Central Bank Governor Says Higher Taxes, Spending Cuts Coming.
The new Governor of the Central Bank has made major upgrades to the way in which the bank reports economic news, what with his quarterly Press conference going out live on the bank’s website the day after each review is released, and that review been made available not only in expanded print form with lots more handy charts and tables, but also in video format. So, by contrast, I found the effort to respond immediately to S&P to have had an amateurish and rushed air about it.
I consider it a blemish on the solid output of professionally presented Press material which has been the order of the day from the governor’s first economic review, which took place in January.
My official comment on it could therefore be summed up as follows: “Poor. Central Bank. Response.”
The country has done remarkably well in handling the transition of power and all Barbadians have shown dignity and composure in going about their lives despite the deep-felt emotions surging beneath the surface.
We will need this week and possibly the next to complete our national duty in laying to rest the fallen Prime Minister, and to put the country back into gear and try to move on. But, to change metaphors here, we will also have to press the fast-forward button to try to catch up to where the world has gone ahead without us over the past six months if we are to stave off the possibility of higher debt cost and a downward economic spiral.
We have our work cut out for us.
