General elections often generate a huge amount of debate on all kinds of issues that are dear to the hearts of not only our politicians but also the electorate.
Although the debates usually follow party lines and ideologies, the issues on the table are more often than not critical to the overall development of the country.
And for that reason, the electorate has to take a serious look at the arguments advanced from all sides and come to some conclusion as to which party’s platform is more desirable, given the direction in which they wish to see the country proceed.
Hence, the politicians and those responsible for articulating policies should be mindful of the prevailing situation in the economy and think not with their hearts but with their heads.
Indeed, it would be very unwise for any political party facing an election to ignore the obvious challenges and issues facing the society and craft policies that are purely “pie in the sky” ideas that have nothing to do with reality.
As a practical matter, therefore, a high level of maturity and prudence should be exercised when designing policies to take the country forward.
It is therefore not enough for our politicians to promise all kinds of “goodies”, especially when they know that their ability to deliver will be severely hampered by the inability to finance the associated expenditures or cope with lost revenue.
And that basic consideration should form the core of a commitment to fiscal responsibility especially, for the party that eventually takes control of the Government.
The upcoming general election in Barbados should present a major opportunity for all of the political parties to demonstrate how serious they really are when it comes to fiscal responsibility.
And that challenge is probably even more telling and immediate for the ruling Democratic Labour Party administration that is about to present what clearly would be its final budgetary proposals before the polls. Why?
Throughout its term in office, the current administration has been battling with a fiscal problem (specifically a huge deficit on the current account), but recently the Minister of Finance has reported a reduction in the current account deficit to 4.5 per cent of GDP.
He also said that the VAT has been performing beyond expectations, with revenue collections therefrom exceeding projections by over $60 million.
Furthermore, the Governor of the Central Bank is on record as claiming that the economy is stable and that the country does not have a debt problem.
This is quite interesting because international rating agency Standard & Poor’s is still concerned about the country’s debt situation and has said that the possibility exists for a further downgrading of the country’s credit rating.
If we accept the positions of the Minister of Finance and Governor of the Central Bank, the obvious question that arises is, what is the fiscally responsible thing for Government to do in the upcoming budgetary proposals?
The answer is simple: refrain from any increases in unproductive current expenditure while simultaneously making some amendments on the direct tax side to improve the well-being of consumers and businesses as a gesture to stimulate economic activity.
