Sunday, April 14, 2024

FOR WHAT IT’S WORTH: A slow-release Govt

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As an agriculturalist, I am familiar with slow-release fertilizers. Pharmacists and doctors understand slow release medication. But now we’re experiencing a slow-release Government.
Every few months it releases another dose of bad news. We heard that foreign exchange reserves were in good shape, the economy was stable and growth was predicted. Now we’re told that foreign exchange has dropped by $200 million in three months and that, far from growing, the economy has contracted.
Amazingly, the Central Bank Governor says he isn’t too worried about the dip in foreign exchange! I wonder what it will take to worry him. He says, though, that we must reduce spending to balance inflows and outflows, revive growth in the various sectors, and if we do the “right things” there should be modest growth next year. Based on previous predictions, I wouldn’t hold my breath!
Shouldn’t we have been doing all “these things” since 2008 or maybe even before when the recession was on the horizon? Doesn’t the Government realize that diagnosis of the problem must be swift and the patient informed immediately so that slow-release medication can be introduced in the early? 
Even better, preventive medicine could keep the patient healthy without the need for drastic medicine with its accompanying side effects.
Optimism and words will not do it. We need to act swiftly and sensibly. Maybe Government needs to establish a Department of Common Sense, although staffing could be a problem since that is a rare commodity nowadays.
While I agree with Sir Frank Alleyne that corrective measures are best phased in gradually, I fear that the time for this has passed, and drastic surgery may now be the only solution. Hopefully, this will be applied in the right areas; that is, Government’s continued wastage and foreign exchange wastage by importers, and not to the already overburdened young middle class.
We are experiencing reductions in inflows. So should we not be trying to control outflows? Have any measures other than increased taxation been considered?
I tried to have a discussion with a staff member of the Central Bank about the possibility of prioritization of foreign exchange use among sectors, but no discussion was entertained.
Two major foreign exchange users are food and fuel, together accounting for about $1.3 billion annually. Proposals have been made, but ignored, to facilitate import substitution for food. While some progress has been made with alternative energy, the long awaited changes to the Electricity Act, which would allow sale of electricity from alternative sources to the Barbados Light & Power Company, are yet to come. Perhaps foreign companies interested in investment will soon become frustrated and withdraw.
Minister Chris Sinckler, in his recent address to the Chamber of Commerce, stressed the importance of foreign exchange, noting that “we definitely will run out of options once those reserves are dissipated. It is then that our economy will collapse, rendering us a virtual economic colony of the international financial institutions such as the IMF”.
I was therefore shocked when he said later: “We have adequate levels of reserves even in spite of the fall-off in the earning capacity . . . . It means that Mr John Williams can go to his local bankers or the even the Central Bank and purchase foreign exchange to buy all of those wonderful imported goods he so dearly loves to sell to visitors and locals alike. It means that my friend Andrew Bynoe doesn’t have to worry if next week he is going to be able to pay the deposit on the shipment of imported whole milk.”
Astoundingly, he appears to be condoning importation of American milk when local dairy farmers can’t get their milk sold and encouraging importation of goods by retailers rather than encouraging some restraint and more local purchases.
There seems to be considerable wastage in the food industry where exorbitantly priced but unnecessary luxury goods are imported, with large quantities being sold at ridiculously low prices when expiration dates  are approaching or dumped when they have expired. Is this a sensible use of scarce foreign exchange? Reduction of these imports would be painless. It has been done before. Why not now? Have we become so spoiled?
Instead of increasing taxes to dampen use of foreign exchange, why not reduce the foreign choices and encourage purchase of local products?
• Dr Frances Chandler is a former Independent senator.

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