“We are not doing well with this crisis, we are not handling it too well,” former Central Bank Governor Sir Courtney Blackman said recently, sharing his thoughts on Barbados’ current economic situation.
“I think that the leadership of both [political] parties have in the beginning miscalculated the severity of this crisis,” Sir Courtney told BARBADOS BUSINESS AUTHORITY, remarking that the current economic situation was “worse than the 1929 crisis”.
He said when the crisis had in the early stages affected Europe “very badly, bringing down countries like Ireland and Greece and caused a lot of trouble to others,” Barbados “did not admit that it would affect us severely”.
The country’s first Central Bank governor pointed out: “The political leadership on both sides did not warn the electorate that the country could not escape from pain . . . . Both parties tried to give the impression that they knew how to deal with it when in fact they did not.
“One mistake I think this present administration made was the medium-term plan which they launched and I was always very sceptical about it because I did not think that the deficit was the critical thing they should be looking at. That Medium-Term [Fiscal Strategy] was very classical. It was the same old-fashioned kind of thing in a situation which had changed tremendously.
“This thing about a plan where you hope to achieve a balanced budget in 2014 is not going to happen.”
Instead, Sir Courtney suggested that what the country needed at that time was “a strategic plan” through which “the critical areas where you have to make hard decisions today” might have been identified.
“Strategic planning is an exercise which helps you to identify the critical areas where hard decisions have to be taken today, not tomorrow, so that you will have a chance of achieving the objective sometime in the future, so we have to make decisions on how to manage our foreign exchange”, he added.
In his view, ensuring adequate foreign exchange reserves at this time ought to be the “critical” consideration.
He reasoned: “If my foreign exchange reserves collapse, as they had long before this crisis in Guyana and Trinidad and Jamaica, things will get worse and worse,” and he was “happy” that Governor of the Central Bank Dr DeLisle Worrell shared that viewpoint.
“You focus on the level of foreign exchange and as long as you have adequate foreign exchange reserves you will survive and that is a critical factor,” Sir Courtney added.
He identified agriculture, crime, energy and management of statutory corporations as four possible areas where “hard decisions have to be made to reduce the loss of foreign exchange and restore the foreign reserves to comfortable levels”.
He said Barbados should step up its food production as had been done during World War II.
Secondly, he suggested a more aggressive approach to dealing with crime which he saw as a possible threat to the tourism industry, Barbados’ major source of foreign exchange. He also wanted to see more action than talk about energy.
He asserted “weak management” of statutory corporations was costing Barbados “millions of dollars” – losses that the island could not afford in a crisis.
Sir Courtney dismissed as “nonsensical” views expressed by local economists suggesting that the pain being felt by Barbadians as a result of the present economic conditions had nothing to do with the global crisis.
“We have been injured by this crisis because we are in the wake of it,” he argued.
The former Central Bank governor said that he did not support the devaluation lobby, observing that “every country in the region that has devalued has accelerated its descent into hell”.
Instead, he saw tight fiscal policy and wage restraint as “the price of maintaining the peg”.
Speaking before the presentation of the Budgetary proposals, Sir Courtney also expressed the view that anyone with the capacity to benefit from tertiary education should have that opportunity, with loan funds being made available where necessary.
Payment of fees by Barbadian students attending University of the West Indies campuses proposed by Finance Minister Chris Sinckler in this year’s Budget, has since turned out to be one of the most contentious proposals in the Budget.
Sir Courtney praised the ability of current Central Bank Governor, arguing “people with the experience of the present governor are rare. “Very few people in Barbados are really in a position to assess whether the governor is doing well or not,” he said.
Though conceding that Worrell was not infallible, Sir Courtney said “most of the people who are talking think that they know what to do but they don’t know what to do. It takes a long time to develop a technocrat of the quality of the governor”.
