The difficulties confronting regional economies continue to stare us in the faceon a daily basis. We hear of problems with thefiscal deficit in most islands, along with the painand stress of civil servants clamouring for wageincreases to cushion them against increasesin the cost of living.
Quite often, such increases are outside the reachof the governments; and the discussion turns tothe almost inevitable austerity-like measures that some administrations may be forced to implement with a view to making ends meet, if only ona short-term basis!
However we approach the issues, theseare difficult times; and adjustments will haveto be made to current economic strategieswhenever it becomes clear that they are notworking or may have been blown off course.
Recessions by nature mean reduced government revenues through loss of jobs, smaller Pay AsYou Earn taxes and smaller corporate profits.And if there is no follow-up reduction in spending, then the whole scenario spells trouble for the national welfare and the minister of finance’s budgetary planning.
Therefore, it should not have come as a surprise to anyone, in light of continued sluggishness andno growth in the Barbados economy, that the Medium Term Fiscal Strategy is being revised. Central Bank Governor Dr DeLisle Worrell saidso last week.
Now Minister of Finance Chris Sinckler hasmade it crystal clear that after wide consultations with the relevant interested bodies he will,in August, publicly speak to the issue.
We anticipate that there will be some anxious comments and even more anxious commentators speaking to these issues because not so long agowe were told that the economy had been stabilized. Minister Denis Kellman was even more dogmatic than his colleagues, indicating that economic improvement was around the corner and businessmen were told to stand by to take advantage of the economic lift-off.
Alas, the market has a different perspective. Investors have said that regional governmentbonds are not favoured investments for them.We can therefore understand Minister Sinckler’s desire to consult widely and thereafter rewritethe Medium Term Fiscal Strategy.
We fully recognize the situation such as exists and so have some in the private sector. They are calling on Government to take the lead in pullingthe economy around, and the local Institute of Chartered Accountants has taken the bold stepand declared that it is writing a Medium Term Fiscal Strategy of its own for presentationto Government in about three months.
We also hear that the World Bank has been predicting very low growth for our economy forthis year; and all these matters have drawn attention more sharply to the tasks that confrontthe Government as the time comes for the first Budget of the new administration.
It is now obvious that business as usual cannotbe maintained in the face of the continuing economic problems; and while it is proper that consultations should take place, we urge that relevant decisionsbe taken with deliberate dispatch, without any disrespect to the value of considering other perspectives, including in particular thewider views of the general public.