TWENTY-FIFTEEN was the year when the falling price of oil, to put it “crudely”, saved Barbados’ bacon. Even with the steep excise taxes added in, the Government had no choice but to reduce the price of gasoline and diesel as the oil rout continued. Can you imagine how this must have hurt the sensibilities of the tax-gougers on Bay Street?
Yes, it was the year Big Oil came to our rescue. In terms of the likelihood of that happening, which it did, that is akin to your bank manager saying: “Hey, you really don’t qualify for this loan, but we wanted you to have it anyway.” And then, on top of that, you get a credit card in the mail with pre-approved credit of $10 000 and your favourite store not only tells you that you’re also pre-approved for another $10 000 in store purchases, but: “Here’s another $1 500 cash that we will lend for whatever reason!” (Hint: check the interest rate).
See, getting “approved” for a loan or a mortgage or a credit card has more to do with how much liquidity your bank or department store has than how desirable you might be as a customer. Oh, yes, I was talking about how nice Big Oil has been to us in 2015. And yes, it had absolutely nothing to do with us. It was simply Saudi Arabia trying to kill off the United States shale and fracking industry.
Of course, the world oil price dropping by over half 18 months ago, and after, a short rally, falling again to their lowest levels since the meltdown of 2008, does not square with a fall in gasoline at the pump of around 20 to 25 per cent. But this is Barbados, where the Government sets the prices and depends on excise taxes for millions of dollars in revenue. So you can bet they won’t be passing on every dollar saved in buying oil to the consumer. The consumer? Give us a break! Why do you think they are called “consumers”?
Also, putting more pep in our national economic step has been the performance of the tourism industry. The 15 per cent rise in long stay arrivals over the year certainly put hard dollars back into the economy, which was on virtual lockdown. So, of course, having been given this lagniappe (defined as “a bonus or extra gift”) – or as I have heard a Bajan called it, a “Lan’ in yuh lap”) you might expect the Government to give us a little easement on taxes? A little rollback on something? How about reducing value added tax (VAT) to 16 per cent? How about reinstating contributions to pensions funds? How about a glass of water?
Are you joking? You know the finance minister is “Never-dreamt-of-a-tax-he-didn’t-like” Christopher Sinckler, correct? So in a world where oil prices are melting away like Arctic ice caps, it was incumbent on the minister to take up the slack. He carried out his woeful duty by removing almost all the ways the middle class reduced its taxes and the less fortunate pay for items in the supermarket. The effects will be felt by April on the first one. Most of us can’t remember what VAT is being charged on or not, unless we see a big “VAT FREE” sign on the supermarket shelf, but we feel the pain in our pockets every time we shop.
However, Mr “No Pain, No Gain” Sinckler, who has admirably reduced his own consumption and enviably tightened his own belt over the past year, clearly wants every man, woman and child to do the same. Except that the country’s economy requires that we spend. And that is the whole sum of all our troubles right there. If the economy shows any growth this year, it will be because we spent more, maybe all that we saved on gasoline and diesel and bunker “C’’ fuel (the latter reflected on our electricity bills).
But it will not be enough. I didn’t say so – the Central Bank did. With the Government terrified of making any more cuts to failing and flat-lining statutory corporations, and which has been talking for over a year only about selling off its oil storages but nothing else, it needs over half a billion dollars in foreign investment urgently, says the Central Bank: “The principal factors affecting the near term growth outlook are the prospects for tourism and the implementation of major private and Government-funded investment projects . . . . The growth prospects depend heavily on the success of Government’s medium term programme for growth and fiscal adjustment.” – Central Bank of Barbados, September Press release.
On the first point, we are still awaiting half a billion dollars in such investment, said the bank. On the second, without another $300 million or $400 million in expenditure savings, said the bank a few Press releases ago, the country may not make those mid-term fiscal strategy goals. So while I could write a nice long article on all the merger mania that went on around here over the past year, and how important it is to our future, for me the day-to-day reality of life in Barbados was not who bought Cable & Wireless or Banks Holdings Limited, but how the Government and outside market forces have impacted our every day living and purchasing patterns, as we try to survive in an economy that has not grown in five or so years.
We may be in for a rough ride in 2016, but as long as oil prices stay down, we will make it, I think.
