CHRIS SINCKLER has to be prepared to lose some political capital if he is to prove himself worthy Minister of Finance.
Faced with a lowered Standard& Poor’s credit rating because of the country’s rising debt situation – “delays in the Government’s fiscal-consolidation efforts” – immediate past president of the Barbados Economic Society, Anthony Johnson, said the senior Cabinet member has to make some tough decisions in his 2010 Budgetary Proposals.
Saying the local situation was analogous to events in Britain, though not to the same degree, Johnson said Sinckler should be prepared to lose personal popularity for the sake of the country’s economic stability.
He said the minister should even consider increasing the value added tax rate by one or two per cent for a 12- to 18-month period as a temporary measure.
“That is something that the minister will have to examine. Prices are high right now but something has to be done – there are no two ways about it. It is either more taxes or reduced expenditure – either way, it is going to be bitter medicine,” the long-standing economist told BARBADOS BUSINESS AUTHORITY.
He likened the increased tax option to the six per cent cess tax imposed on all extraregional imports by former Prime Minister Owen Arthur in 2006 to stem the outflow of vital foreign exchange.
“Our import bill is so high. We have not been producing and something has to be done in terms of stemming foreign exchange [outflows] and increasing revenue for Government while reducing expenditure to close the gap. All these things have to be put on the table. . . . What is going to come out in the final mix, I don’t know; but they are all possibilities,” he pointed out.
While these are short-term measures, Johnson said, long-term restructuring of the Barbados economy was needed to get the productive sectors going while also improving efficiencies in the public sector.
“We really need a complete shakeup. It cannot be business as usual and Chris Sinckler has to make that perfectly clear. It cannot be business as usual; if not, we will be on a sinking ship,” Johnson said bluntly.
During his quarterly Press conference on Wednesday, Central Bank of Barbados Governor Dr DeLisle Worrell said: “Cutting expenditure is really difficult [now] because you have already pared things down to the bone.”
