Friday, March 1, 2024

WHAT MATTERS MOST: Talking above your weight


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Some very partisan people, who profess ideological innocence, have attempted to paint my writings as politically biased over the last five years.
At least, time has been faithful to my perspectives on the Barbados economy and perhaps the very partisan among us may stop to consider that ultimately we are all Barbadians.
But there is a sense in which Barbados is now talking above its weight rather than punching above its weight as observed by then United Nations Secretary General Kofi Annan just over a decade ago.
Again, the very partisan among us would want to suggest that back then the country simply had an abundance of resources, without recognizing that resources had and still have to be managed.
No man is perfect, so there will always be room to be critical of any government, especially when some inefficiency is apparently accepted and perhaps tolerated more so in small societies than in larger ones.
No matter how we try to adopt systems from the more advanced countries, our cultural peculiarities would of necessity alter them.
For example, our smallness and intimacy as a country play their part in the way we honour the dead. Non-Barbadian employers would not immediately appreciate why we attend the funerals of our close friends and associates.
Therefore, the time taken from work would be seen as money lost to them since time is money in advanced economies.
While in some ways we are different, time is money and there are very few instances in which the statement is not true in a business sense.
When a Government reaches the point where it completely ignores the truth in the statement, it treats money as easy to come by and therefore easier to spend. In this regard, the strategy is either to spend then tax or tax and spend. In addition, there is always, or so it is believed, the option to borrow.
The Barbados economy is now fully compromised by the difficulty in continuing to borrow from local sources and the cost of borrowing from foreign sources, given the junk bond status that it has assumed.
In spite of these constraints, which were present for over two years at least, the Government refused and quite frankly continues to refuse to address the problem of its spending.
Unfortunately, in next week’s Budget, there will be more taxes put on Barbadians to be followed by even more in the following fiscal year. This is unfair to all who were led to believe that the Medium-Term Fiscal Strategy – the written document – was on track and working. Furthermore, they were told that the Government was ahead of the targets.
The written plan appeared to contain all the trappings of a sensible fiscal strategy; then there was the real plan that suggested that money was not a problem as the economy was secondary to the society.
The former never met any of its targets but the public was led to believe so, prior to this year’s general elections. The Government succeeded in its blatant attempt to embrace the innocence of its faithful followers, while reducing any opponent of such ignorance to the uncaring realm of human kind.
Time has now caught up with the untruths told about the country’s fiscal affairs. If truth is finally told about the economy, there is still a lack of consensus on the way forward. This is in direct contrast to what happened in the economic crisis of the early 1990s when leadership of the process eventually resulted in consensus.
On several occasions, it was noted that Barbados experienced an economic crisis in the early 1990s with major problems relating to our public finances, foreign exchange, growth and unemployment.
However, the current situation at its lowest ebb was never as bad, with only the public finances being worse than the earlier period. It was not politically prudent to admit to the latter as the international economic environment offered a convenient escape. 
In the absence of strong leadership, the proposed budget is a curious combination of heavy taxation and limited expenditure cuts to address the obvious problem of Government spending. This approach will further dampen prospects for economic growth, which is the only sustainable way out of the current fiscal crisis.
The new political strategy is to take the Government’s capital works programme off the table as though it has no implications for the fiscal deficit or the national debt. The more things change, the more they remain the same! 
• Clyde Mascoll is an economist and Opposition Barbados Labour Party spokesman on the economy.


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