GOVERNMENT SEEMS TO have woken up to the realization of the need to act and to do so with some measure of urgency in an effort to stop the economic morass which has stymied or eliminated growth in recent years.
This call to action was evident, given some of the measures outlined last evening by Minister of Finance Chris Sinckler in his presentation of the annual Financial Statement and Budgetary Proposals.
It seems as if the minister has listened to the many voices and views of what ought to be done in tackling this country’s struggling economy.
The Finance Minister has outlined a plan that purports to address the deficit problem in a 19-month period; seven months in this fiscal year 2013/14 and for the full 2014/15 year. He has characterised the adjustments as front loaded to reduce the deficit to an historic low level of below 3.0 per cent by March 31, 2015.
The appeals have come from the experts and the layman that something be done to address the country’s financial situation and Mr. Sinckler and his colleagues in government have now made a response in a general way. But like the Medium Term Strategy the presentation was short of details or strategy for implementation in some important areas and sounded like deja vu or we have heard that before in others.
A key part of the budgetary proposal is the $150.9 million tax increase measures. This has gone against the recommendations of some of the pundits. Historically for this government increased tax measures have not delivered the expected results. The success of these measures will dependent on the outcome of the growth measures that are outlined.
The drivers of growth as outlined are largely not new. We have heard them before – the Four Seasons, Road works programme, the push for new rooms, the hotel refurbishment fund, the Cruise Terminal and Pier Head Projects – the list is extensive but the ability to get them going over the next year may be a stumbling block to the success of this plan.
The requirement for Barbadian citizens to pay tuition fees to pursue studies at the University of the West Indies from the academic year 2014/2015 is by the minister’s own admission a major shift in policy by the government and the country. This may be a reflection of the resolve of the administration to be bold in meeting the fiscal challenge head on.
At the end of the presentation we were left to wonder how some of the expenditure cuts totalling $285 million will be implemented. How will the full $200 million in transfers and subsidies be eliminated? These steps are welcomed but we await the details – and the action. It is evident that implementation is going to be key to the success of these proposals.