LAST WEEK’S 2016 Budget presentation was anticipated with considerable trepidation which is entirely reasonable when one considers the fact that it did not appear to be a planned activity in the financial calendar which requires that government lay estimates by April 1. One of the more profound observations made by former prime minister Owen Arthur during his tenure was that there was an obvious relationship between what government proposes to spend and the manner in which it funds this expenditure and this should ideally result in the simultaneous presentation of the two exercises.
While Arthur did not himself achieve this during those years, it can generally be agreed that he progressively moved in this direction. Over time, he steadily moved towards a heavier reliance on VAT and away from the type of revenue-raising measures that would be announced in a budget, which became more of a financial and economic statement. We grew accustomed to an environment where the budget was not feared and last week’s experience was therefore novel.
The fact that we should fear a Sinckler budget at this time is ironic since it comes after the Prime Minister’s announcement that “Easter” was here. In his Founder’s Day message this year, Stuart was reported to have said Barbados has risen from its economic troubles. More specifically, “We have had a rough time over the last seven years, but . . . you can only internalise the joy of Easter because there is something called Good Friday . . . Easter is with us now”. This direct quotation leaves little doubt that we should expect an end to austerity and to share in the bounty that this programme has generated. The fact that a budget thereafter collected considerably more revenue than it disbursed, tells us that either Easter has been postponed or perhaps Stuart was speaking metaphorically with respect to an entirely different scenario.
Regarding Sinckler, there are also some challenges with respect to the expectations he creates and the reality that emerges thereafter. Certainly we can forgive him for the obvious failure of the medium-term fiscal strategy, since that was not his. He, however, needs to explain the success or lack therefore of the revised medium-term fiscal strategy and the 2013 budgetary strategy which was intended to reduce the deficit to manageable proportions and deal with our persistent debt. It is now 2016 and far from reporting success of a programme of economic adjustment, the financial statement spoke to both a deficit and debt scenario that is worse than it was in 2008 and 2013.
This Budget carried the customary share of promises regarding economic prosperity that was “close”. However, on this occasion the language does seem more imminent. In the past reference was made to months and years, while this time we are told our foreign exchange woes will be settled in weeks, at which time our FX cup will “rennet over”. The foreign inflows of which the Minister spoke are indeed substantial and this brings to mind a speech he made in March of 2013. In his 2013-14 Estimates presentation, Sinckler promised a $600 million stimulus package to boost the local economy and create at least 1 000 new jobs. He referenced the new cruise pier at the Bridgetown port which was to start “in a few weeks” since full-financing was available (then). He also mentioned the Pierhead Marina which was also fully financed (US$60 million) and would start in 2013, a Cargo Shed at the airport worth US$10 million and US$40 million for roadworks.
Thus far, a single of these listed projects started in March of 2015 (which is a mere two years late), while we await further details on the others and the 1 000 jobs that will be created. One can therefore reasonably anticipate that much of Sinckler’s promises this time around will be taken with all necessary seasonings. go unnoticed.
Those who predicted a harsh budget have been vindicated in the short term, while those who worry about the long-term consequences of its impact on Government’s credibility and our economic viability should continue worrying.
Peter W. Wickham is a political consultant and a director of Caribbean Development Research Services (CADRES). Email: peter.w.wickham@gmail.com
