All professions have one thing in common; their ultimate goal is to find solutions to problems. The acquisition of knowledge whether through formal or informal means is a necessary condition in pursuit of the goal.
The knowledge is better however if accompanied by experience.
An institution as fundamental as the Central Bank of Barbados has housed tremendous expertise since 1972 and has systems to capture the inputs of such expertise that would have moved on. It is therefore not only the numbers that flow from such an institution that matter but what matters most is the reputation of the institution.
It is in this vein that the Governor of the bank has to recognize that by dint of the position which he holds, he is regarded as the country’s chief economist. In recent months some of his comments have been outrageous but none more so than the most recent.
If the forecasts of the bank are no better than going to a fortune-teller, then there is no need for the governor. But more importantly the comment reflects on his highly professional staff.
Some of his previous comments reflected on the wider economists’ community; but he is entitled to his own opinion though not his own facts.
All forecasts are accompanied by what is described as a confidence interval, that is the forecast is not a point estimate, it is a range within which there is some confidence in its achievability.
In the halcyon days of Dr Courtney Blackman as governor of the bank, the current governor was his chief economic adviser and forecaster; the private sector, the politicians and the people of Barbados had tremendous confidence in the pronouncements of the Central Bank. The track record of the bank speaks for itself.
This country has had a proud record of economic management and at a time when the economics profession is better prepared, the comments of the governor in recent months have not instilled any confidence in the country’s capacity to handle the present economic difficulties. Our circumstances cannot be left up to the recovery of the international economy as is being suggested.
Not surprisingly, the message of the government is the same that is the problem is an imported one, so it cannot be solved with home-grown policies.
The fiscal crisis is not imported and there are three ways to address it: (1) increasing taxation, (2) borrowing, and (3) cutting expenditure. The first two have been done already and they cannot solve the self-imposed fiscal crisis caused by excessive spending.
The solution does not require a “magic bullet”; it cannot be solved by changing the reporting of the fiscal numbers or the foreign reserves and it certainly cannot be solved by going to a fortune teller.
It however can be solved with the local expertise available to Barbados but does the government have the will to solve the problem which it created?
The first thing is for the government to stop denying that it is responsible for the excessive spending since 2007. There may be an alternative posture but the bare facts lie before us all in the reports of the Central Bank.
Unfortunately the advice of the Central Bank is no more worthwhile than that of a fortune teller.
Amazingly, having made the fortune teller comment, Dr Worrell still relies on the Medium-Term Development Strategy of Barbados 2010-2014 which contains forecasts down to 2014. He also uses the government fiscal strategy document which is a companion document to convey confidence in the government’s ability to solve the fiscal crisis by 2015.
The governor must understand that he is not only the country’s chief economist but its chief source of confidence in the future since Prime Minister Stuart has publicly expressed his lack of confidence in local economists.
The real issue is inspiring confidence!
