Wednesday, April 24, 2024

ON REFLECTION: Come with an economic plan


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CAN SOMEONE TELL ME what is wrong with the current economic picture?
Barbados has now been forced to revise its 2010-2014 Medium-Term Fiscal Strategy (MTFS), while at the same time a $600 million stimulus package is to be unveiled by the time the next Financial Statement And Budgetary Proposals are presented around August.
This obvious change in Barbados’ economic strategy was alluded to by Minister of Finance Chris Sinckler in the recent Estimates Of Revenue And Expenditure 2013-2014, but it now resounds with “doom and gloom” coming from the island’s chief economist and Central Bank Governor Dr DeLisle Worrell.
The governor had previously preached the gospel of sticking wholeheartedly with the MTFS, which was started in 2010 with the laudable intention of reducing the overall fiscal deficit and generating a balanced budget by 2014 and a surplus by 2015, while keeping economic growth at acceptable levels by focusing on the foreign exchange-earning sectors.
But last Tuesday Dr Worrell told Barbadians in the Central Bank’s first quarterly report for 2013 that “the fiscal consolidation strategy must be brought back on track, and a new medium-term adjustment strategy must be implemented using the current deficit as a point of departure”.
That deficit has moved from about 4.7 per cent to 7.3 per cent. It is worrying, to say the least. Before last Tuesday’s revelation, Barbadians had been told the country had no debt problem, and on Wednesday they were also told to avoid looking through binoculars tinted with the “doom and gloom” of an economy that has in fact contracted by 0.4 per cent.
But in the face of a stark admission that the MTFS has failed, should Barbadians not expect even worse this year, a year in which the economy was projected to grow by a mere 0.7 per cent?
And with a worryingly widening fiscal deficit, a frightening dip in tourist arrivals and spending, and a decline in revenue by over $120 million in the last financial year, Barbadians can do no less than expect or predict doom and gloom unless Government, like the Central Bank, comes clean with the people who trusted it enough to give it a new mandate on February 21, 2013.
In fact, the just released quarterly report should make it incumbent upon  Government to match the Central Bank’s accountability by sharing information on a quarterly basis or, better yet, giving Barbadians important updates after its weekly Cabinet meetings.
I sincerely believe the economy now has to be the No. 1 concern for this administration, not only in the face of zero ratings, which the country’s chief economist has repeatedly asked us to ignore, but in the face of his own just released frightening figures.
I must also ask this: Will the $600 million stimulus – which by its very size barely conceals a form of panic – do what could not be done with the 2011 increase in the rate of the value added tax, which is now earning less than it was last year? Confusing, to say the least!
This is a crucial juncture for this newly re-elected Government, the centrepiece of whose economic growth strategy is based on an admirable but essentially long-term plan of renewable energy provision.
But what is the immediate economic plan? Don’t worry, be happy?
The statistics of the first three months of 2013 should force Government to give more information on the harsh reality of the economic situation; and this should be buttressed by realistic assurance and a clearly defined strategy instead of what is now appearing to be a laissez-faire approach to a worsening situation.
We the people gave the present Government another chance in the interest of fair play, despite a very powerful opposing stance driven by strong public relations and strategic polls.
Therefore, it is time to trust the same people with clear information instead of surprising them with a massive stimulus or – what next? – a privatization plan.
Come clean and come with a plan, since the Government’s new and well deserved mandate demands no less.
Ricky Jordan is an Associate Editor of THE NATION.


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