In his Budget presentation in mid-August, Minister of Finance Chris Sinckler lauded the administration’s effort to keep the economy on track during the worst recession to hit the global economy since the Great Depression (although economists have said it is only about one-sixth of the downturn experienced back in the 1930s).
He proclaimed: “Our economy has begun to show definite signs of economic turnaround. Indeed, Sir, this performance, which we expect to continue to improve, is as good as, or better than, the early recovery years of any previous recession which we have encountered in this country in the last 30 years.”
I hope Mr Sinckler is right, not only for his sake, but the entire country’s. We will get the first glimpse of how accurate that prognosis was when the Central Bank of Barbados holds its third-quarter review on Wednesday, October 12, and the next day, when the International Monetary Fund (IMF) releases its Regional Economic Outlook, a twice-yearly tome that is being launched here in Barbados for the first time this year.
By the way, according to the Central Bank’s Press release: “The IMF’s outlook provides in-depth coverage of recent economic developments in the region, and country-specific analyses of risks ranging from inflation, economic overheating, rising commodity prices and rapid credit growth, as well as prospects for the private sector, trade and public spending.”
Basically, the Government is hoping for a better report card than this one: “The (2010-11) winter tourist season saw a turnaround in arrivals, after two years of decline. However, tourists have spent less while vacationing on the island. As a result, there has been no build-up in foreign exchange reserves in the first half of the year . . . .
“Business profitability has not recovered, and corporation tax receipts fell short of expectations. This has made it difficult for Government to meet fiscal targets, in spite of the increase in the VAT rate and restraint on discretional spending.” (Source: Central Bank of Barbados Press Release, June 2011.)
In percentages, the Central Bank said GDP growth for the first half of the year was estimated at 2.1 per cent, led by tourism at five per cent, construction at three per cent and wholesale/retail at two per cent.
The bank said it was still expecting growth of about two per cent for the year, as long as there was no downturn in the tourism sector. Foreign inflows of capital could continue to boost the construction sector, and while there was no inflationary pressure from domestic sources, there was unpredictability in import prices, especially for petroleum.
The minister of finance will therefore be getting two report cards on how the economy is doing within a couple of weeks.
One early signal that things might not be improving as excellently as might have been expected from reading the Budget speech, is the case of Coverley Estates.
Describing Coverley Estates – where tiny box-like houses are strung together street after mind-numbing street – as “palatial”, Mr Sinckler said that they, among other housing projects in which the Government was involved, constituted “real housing solutions, Sir, that can be touched, where real people live . . . and where toilets are flushed every day”.
Apparently there is not enough touching, living and flushing going on at Coverley to satisfy the expectations of the developers, who recently launched an ad campaign announcing that they would now also provide financing for the homes.
The stated intention: to cut the time it is taking for those dithering commercial banks to approve mortgages.
But of course, the developers would not mind on-selling said self-financed mortgages to the banks later on.
Talk about desperate.
Everyone knows how long it takes banks to decide on whether to give you a mortgage or not, and if providing financing was always the intention, surely it would have been unveiled when the homes at Coverley were unveiled to the public one afternoon not so long ago.
Hundreds, maybe thousands, of people flocked to see what was in store for them. They came, they saw, they left. Seems like they’re not buying.
Coverley might be a great place to put down roots, if you like living that close to your neighbour.
Now that might just be me talking, but I think we can all agree, that of all the good and positive things Coverley Estates might be, it isn’t palatial.
