Tuesday, April 16, 2024

THE ISSUE: Concern mounting over state of economy


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Rarely does a week go by without an economist or private sector representative voicing concern about the state of the economy; or a Government official seeking to reassure Barbadians that the economic situation is under control.
The April 13 SATURDAY SUN reported that concern was mounting in the private sector.
Days after Central Bank Governor Dr DeLisle Worrell gave his review of the performance of the economy in the first quarter of this year, chairman of the Barbados Private Sector Association (BPSA), John Williams called on Government to take urgent and immediate action to effect some “positive” change.
He stressed that the island’s level of foreign reserves could be the only thing that determined Barbados’ survival after nearly five years of weak growth and recessionary conditions.
According to the BPSA chairman, Government needed to take immediate action both to cut the hundreds of millions it was spending on state agencies and to improve efficiency.
“We must undertake immediate and real reform of those areas and agencies which are a burden on our national budget. As a country we have neither the time nor the money to continue as we are,” the senior business executive said.
With Government spending up by six per cent, Williams said restraint in spending should be the principal guide for state agencies. 
“This report is of great concern to the business and investor community and the private sector restates its position that there are many things that we in Barbados can do to encourage investment, drive growth, and increase our earnings, not by spending money but by changing our outlook and approach,” Williams added.
Moreover, in the April 22 BARBADOS BUSINESS AUTHORITY, president of the Institute of Chartered Accountants of Barbados (ICAB) David Simpson described as “disturbing” the projection that there will be no increase in the contribution of tourism and international business to the economy this year.
Referring to the Central Bank of Barbados’ forecast that gross domestic product was expected to remain flat, he expressed concern about the performance of the island’s two main foreign exchange earners.
He said Government and the relevant stakeholders had to find ways to create “at least minimal growth” in these sectors.
“We are aware we have lots of tax treaties in existence,” Simpson said. “There’s a lot of legislation in place to encourage investment from the international businesses around the world but one harsh reality even in terms of tourism, is that tourists and businesses alike are going to other destinations that ultimately are lower cost operating destinations.” 
The ICAB president said the country had to become more innovative.
“The stakeholders in tourism, international business [and] manufacturing need to determine what can we do differently and even if our costs remain high  . . . , what are the things we can do within our industries to make our products and our services more attractive,” he said.
However, in the March 26 DAILY NATION Leader of Public Business in the Senate and Minister of Foreign Affairs Senator Maxine McClean said stabilization?of the economy was complete and it was now time for the restructuring to start.
She said it should not be taken for granted what the Democratic Labour Party (DLP) administration had been able to achieve since taking power in 2008, in terms of keeping the economy on an even keel during a recession that brought other developing countries to their knees.
“I can say categorically that we were able to stabilize the economy,” McClean said.
“We have delivered,” she added, “but our task to restructure is not an easy one. It may not bear fruits in the short term, but we see it as our responsibility so as to offer a proper foundation for the generations to come.”
The Minister reiterated that Government’s intent was to see a Barbados that was economically viable, socially stable and environmentally sound.
Furthermore, Central Bank Governor Dr DeLisle Worrell said Barbados had everything it needed to revive the economy and did not have to rush to boost domestic consumption or compare its growth with that of some neighbouring countries whose gross domestic product (GDP) was far less than ours.
He insisted in the April 1 BARBADOS BUSINESS AUTHORITY that sustainable growth was a marathon and not a sprint, and therefore if Barbados boosted domestic consumption too quickly, it would run out of foreign exchange.
“Only the hopelessly naive will rush to the front of the field. For Barbados, the proper comparison is not with the growth of countries like Guyana and the Dominican Republic whose GDP is less than a third of our own, but with The Bahamas and Bermuda, where GDP is much higher.
“If you compare Barbados’ performance since the 2008 crisis with that of The Bahamas and Bermuda, we see no great difference,” he said.
Worrell said Barbados had all it needed to revive the economy, including innovation and entrepreneurship at home and in the diaspora; examples of success in tourism, international business, agro-processing and alternative energy; and being in the top one-third of global competitiveness as measured by the Global Forum.


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