Tuesday, April 23, 2024

THE HOYOS FILE: Changing lanes in a slow-moving race


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Q in the Community patrons side-step in unison to the music of long-dead country singers, Kadooment revellers bend down a lot as they move forward to Spring Garden, and Government leaders moonwalk, looking like they are going forward when they are really going backward.

Chris Sinckler, our minister of finance, warns that new austerity measures must be introduced in the upcoming budget because the current economic growth projection was being revised downward by our Central Bank. 

The Prime Minister, who ambulates serenely through his job and reminds me of Rudyard Kipling’s number one criterion for how “you’ll be a man, my son,” (as in: “If you can keep your head while all about you are losing theirs, and blaming it on you”) was in his element last May.

He suggested that despite all the problems in the economy, the Government had stuck to its plan to take us safely out of the danger zone and here we were, on the sunny uplands of economic resurgence.

Now, all this muted but nevertheless congratulatory back-patting was based on two things – the resurgence in tourism and the imminent arrival of  hundreds of millions of dollars in investment said to be piling up for disbursement into a whole load of construction projects. 

These projects were written down in Central Bank reports every quarter as being so real you could almost hear the bulldozers clearing the land – and you could at Sam Lord’s for a day or two, then, it seems, a return to all quiet on the eastern front.

The bank said in its half-year economic report issued last week that the economy’s growth trajectory was being held back because “most major investment projects are behind schedule”.

An eventuality for which there was apparently no expectation in earlier reports. I must tell you, I didn’t see that coming. 

As for the fall in the value of the pound due to Brexit, the bank said the main impact here would probably be on the sales of villas and second homes to UK residents. And of course, this would lead to a fall in our reserves too.

Therefore the Central Bank lowered its projection for economic growth this year to 1.5 per cent of GDP, compared to 1.7 per cent made earlier in the year. 

But that was just the precursor to some extended moonwalking. The bank said getting the fiscal deficit under control remained a top priority for Government, which needs to reduce it by about two or three per cent to under four per cent. But with the delays in financing for tourism projects and slower real estate sales, the bank said, it expected foreign private capital inflows of only $55 million for the rest of the year along with net foreign financing for the public sector of just around $99 million.

Just $150-odd million in foreign direct investment for a whole six months? I thought they were queuing up to invest in the stable economy engineered by the calm Dolittlers?

Then came the ominous statement in the Central Bank Press release that, as a result, “foreign exchange outflows will be tightened by the measures to be announced in the coming budget”. The main goal, said the bank, was to maintain foreign reserves of about $938 million at year-end, an increase of just over $50 million over the course of the year. 

Eddy Abed, president of the Barbados Chamber of Commerce & Industry (BCCI), was furious. He had just put out an editorial in the BCCI newsletter to the effect that it was time for Government to free up the economy and free taxpayers from the chains to which they have been tied over the past four years.

He wondered how businesses would get the foreign exchange they needed to order stock for the Christmas season, the busiest time of year, and the time when many retailers make their entire annual profit. If business goes down, so do they.

So, of course, there was more moonwalking. The Central Bank said something about meaning that only Government procurement would be affected, and the private sector would have access to as much as it needed. Sinckler moonwalked by saying that the austerity measures to be re-introduced would not include sending home people. 

If that is the case, Abed’s worst nightmare will come true, as even more attempts at taxation will be imposed on the tired private sector by a Government entirely out of new ideas.

Out of inspiration (if it ever had any), it is terrified to do the one thing it has no choice but to do: reduce the Government payroll as part of a package of other measures. The day-to-day administration costs too much and we have to borrow long-term money to pay short-term wages and salaries. 

And besides that, where are the savings from merging statutory corporations which overlap? Where are the savings from selling or leasing unused Government property, from cutting overheads like electricity? And where are the savings from privatising, yes, you heard the word here, or attempting to, Government entities that actually have marketshare and a good turnover, but are unprofitable because they are poorly run?

I remember the Prime Minister himself stating forcefully at a BCCI luncheon a few years ago that he would have no apologies to make for carrying out the recommendations made by his ministers and committees studying what to do with all those statutory corporations, because the entities had outlived their usefulness and were no longer the fast-acting one-stop shops they were set up to be (and never actually were).

But with the long delay in getting a ruling out of the Employment Rights Tribunal and the political pain the retrenchment of those 3 000 workers in early 2014 caused the Dolittle administration, it is likely that the right-sizing of the public service will be passed on, like the baton in a slow-moving relay race, to the next administration.


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