IT SEEMS as if these days, the buzz words in budgeting are “primary surplus”.
Well, a country has a primary surplus if its income is greater than expenses. But “holy mackerel”, we in Barbados make a claim for a primary surplus yet we have an overall deficit meaning that our income is less than our expenses plus interest.
Options? Well, we can cut expenses to shift into overall surplus through austerity. Here in Barbados the principal means of cutting expenses seems to be to send home people. We could also have declared bankruptcy leading to default of payment of debts – not recommended.
On the other hand, we could try to refinance our debt – recommended. From reports it seems as if at least one debt – Credit Suisse – has been the subject of surreptitious refinancing.
The other plank of Government’s austerity seems to be to tax people into involuntary poverty. More and more people are becoming the working poor. And with the imposition of VAT on hundreds of food items, previously non-VAT, we the people do “declare a secondary surplus – poverty”.
A combination of the lash of economic policy folly and the bite of insensitivity to the plight of the populace perhaps has the majority panting for change. Yet there has to be a caution – be careful what you ask for. Any succeeding government will be faced with an accumulation of yearly deficits – debt. Those deficits would have occurred when government’s expenditures exceeded the revenue generated. Remember, the deficit can be measured with or without including the interest payments on the debt as expenditures.
Given the “wonderful lack of transparency” in respect to our true current fiscal position, no succeeding government will have any idea what they will be facing until after a general election. Any new Minister of Finance can be expected to be hit with the over-ripe tomatoes of private sector claims and the rotten eggs of unpaid balances and shortfalls to ministries, institutions and other individuals.
The new government will in fact be faced with a tertiary surplus – debt, massive debt.
– Michael Rudder
