Saturday, April 20, 2024

How Barbados can reverse its fortunes


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There can be improvement in Barbados’ economy even in the absence of a global turnaround.
Barbados is a small, open economy operating in a global environment. We trade with other countries, importing most of what is used by consumers and businesses, and exporting tourism, international business and other services, along with some commodities.
As a result there are factors that are outside of our ability to control.
However, there are possibilities that Barbados can pursue that could feasibly improve our economic situation.
Western economies, even the smallest of them, are driven to some degree by the levels of confidence of the people and businesses that operate in the market.
As confidence increases, economic activity increases, jobs are generated and government revenue improves.
People must be able to see, based on its allocation of resources, that Government is focused on facilitating the generation of economic activity while protecting the most vulnerable within the society.
This balance is achieved when producers and consumers are able to detect that policy direction. It is important for Government not to send any signals that suggest it is wasting scarce resources or has wrongly placed priorities.
For Barbados there needs to be intentional focus on  tourism, international business and agriculture. Along with adequate allocations in the Estimates there needs to be meaningful engagement of industry players through consultations and realistic plans of action.
Linkages across these sectors, and with others, need to be actively facilitated rather than constant berating of a real or apparent lack of synergy.
An example of focus and resource allocation: The 2010 decision by the Ministry of Finance to give an extra $6 million allocation to tourism marketing in Britain produced an increase in arrivals from that vital market – while Britain was deep in recession. One dollar spent in a market where we are well-known will produce greater immediate results than a dollar spent in a new market.
Given that a sizeable portion of the GDP of most countries is generated by domestic economic activity, we must stimulate this activity while maintaining adequate foreign reserves. One way to achieve this is by incentivising staycations enhanced with a limited duty-free component.
High levels of taxation have a depressing effect on an economy, including reducing Government revenue. Selective and phased easing of some taxes will stimulate economic activity.
Areas such as personal income taxes, on electricity and inputs in the foreign-exchange generating sectors, and expanding the basket of goods not subject to VAT will drive activity and protect the vulnerable in society.
Barbados is still a desirable place to do business, but this status is under threat from the high degree of difficulty in establishing and operating business here.
A business facilitation unit should be created to assist people with this interest. Also, the crime situation must be swiftly and effectively addressed.
Without neglecting the need to diversify and plan for the medium to long term, we can, with some vision and effort, improve Barbados’ economy in the absence  of a global turnaround.
• Colin Jordan is immediate past president of the Barbados Hotel & Tourism Association.

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