IT IS ONE THING for the Prime Minister of Barbados to boast of being firmly committed to a home-grown strategy for growth and development that will avoid going to the International Monetary Fund (IMF).
Apparently, it is another thing for the country’s sovereignty to alternatively lie in the hands of well-intentioned profiteering businessmen who are willing to find billions of dollars in loans for it.
This country’s economic progress is now to be assessed purely on its ability to access foreign financing on the road less travelled at any cost, without reference to economic growth, unemployment, cost of living and the like. Our economic goal posts are being shifted not on grounds of industry, but false pride that is being conveniently defined.
What a shame for Barbados that once punched above its weight to be now attracting financial keepers at its gate who sense a country on the ropes, stumbling from pillar to post with its pride at stake.
The imaginary or false pride is wonderfully captured in the Prime Minister’s infrequent rides into town to spew words “. . . full of sound and fury, signifying nothing”.
The economic issue in Barbados is not about whether to go or not to the IMF; it is the inability of the current administration to get it right after seven years of trying to fiscally adjust. The threat of going to the IMF is being used in the same vein that devaluation has been.
In the face of a prolonged economic downturn, the one saving grace was the adequacy of the country’s stock of foreign reserves. It was therefore most surprising to hear from the governor of the Central Bank that “. . . there was no longer a threat to the Barbados dollar”.
This surprising revelation gives the impression that the Barbados dollar was under threat in the recent past and, more important, that if the right things are not done, the threat remains. Herein lies the danger of allowing a technocrat to go outside of his comfort zone.
In his economic review for the end of September 2014, the same governor told Barbadians that there was further fiscal adjustment needed to achieve the target of 6.6 per cent of GDP for the fiscal year 2014/15, ending in March of next year.
He admitted that the fiscal adjustment programme was failing and suggested that the Minister of Finance was bringing a Budget to announce measures aimed at closing the fiscal shortfall of $174.6 million.
In the following weeks, confusion ensued over whether the minister was delivering a ministerial statement or a Budget; the former was chosen and the latter was promised in April 2015.
In essence, the minister postponed introducing the measures which sent a signal of inaction to the international community and Standard & Poor’s (S&P) acted by downgrading the country’s international credit rating once again.
The shifting of the economic goalposts is to divert attention away from the economy’s ongoing underperformance to the external actors of the IMF and S&P which are being made the bane of our economic misery. The strategy is to point the finger at some external source, never the incompetence of the current administration.
If a fiscal target is set and the outcome is below the required performance to meet that target, then the government has failed; no amount of public relations reverses that fact. Furthermore, the economy has not grown so the recovery has not started.
The unemployment rate has increased, which supports the lack of economic growth. The national debt has continued its upward trend, which is the main source of the Government’s increasing need for deficit financing.
In short, while it may be easy to tell Barbadians that an economic recovery is on the way, in spite of evidence to the contrary, it is much more difficult to convey the same message to the external community, whose focus is on specifics and not emotion.
There is considerable merit in pursuing a home-grown programme, which has been the case since 2009, if the policymakers are prepared not only to diagnose but to prescribe. And there is no lack of proper economic diagnosis in this country. The problem has been in the inconvenience of implementation which has exacerbated the economic misery.
There is a deficit of industry as the Government engages in a message of false pride. The latter buys time; the former can be turned around to buy growth and development.
The Government’s emphasis remains on the superficial in spite of its persistent failure.
• Dr Clyde Mascoll is an economist and Opposition Barbados Labour
Party adviser on the economy.
Email [email protected].
