IN A RECENT conversation with an old friend, I was surprised by the apathy she displayed not only for political parties of all colours and persuasions, but for “Government” and most worryingly for the “idea” of a Government.
My friend was able to divorce herself from the actions of the current Democratic Labour Party Government with a casual: “What the Government does is nothing to do with me. I am just trying to live”.
On further reflection, many of us speak and relate to Government as if it was some alien entity.
However, if we look at the Estimates that were recently laid before Parliament, we would see that the action/inaction of a Government matters. The repayment of the Government debt will amount to $1.7 billion for the current financial year.
This means that every Barbadian roughly owns $5 600 in relation to the repayment of the debt. Those repayments will take up about 40 per cent of the total budget, which was stated as $4.5 billion. I have not yet talked about the total Government debt. Before I do, you may wish to sit if you are standing.
The Royal Bank of Canada Caribbean Economic Report (RBC Report) for February 2017 recently stated that for Barbados “gross public sector [Government] debt reached $11.1 billion in 2016, up four per cent or $426 million over 2015”.
This means that every Barbadian roughly owns $37 000. Therefore, for my friend, the fallacy that she “just wants to live” and is somehow removed from the actions/inactions of Government should have been revealed as just that, a fallacy.
It is, however, this fallacy that affects voters in democracies everywhere, as if somehow they are not part of the institutions of Government. This fallacy was concentrated in pithy slogans like “Make America Great Again” in the United States or “Take Back Control” in the United Kingdom, as if control and the power of government were located in some mythical place far and away and not in the voters themselves. These fallacies somehow won because of a toxic mix of anti-globalisation and hyper nationalist rhetoric.
Sadly, the underlying problems that prompted the wins in the first place, such as reforming the international financial system or international political systems such as the European Union and United Nations remain and these systems continue to function as is, doubling down to protect themselves, ironically because of the very wins. Voters were the real losers, whether right, left, nationalist, globalist, whatever ideology.
It is time voters everywhere, not only in Barbados, owned “their” democracies and stop behaving as if they are helpless and hapless bystanders. We may not like a Government as administered by a particular political party, but Government is not some “other”. The Government is you and me.
A Government is represented from among us (of the people) on the basis that we vote for the members of our Parliament (by the people) and a properly functioning Government works to advance the collective interests of all Barbadians (for the people). “The people” make and “the people” can unmake any Government as part of the democratic process.
The current debt is not simply the problem of the Government. Government debt is our debt. There will be less money for education, health and social services. It also may mean an increase in the tax burden, whether directly or indirectly to cover the repayment of the debt, especially if other productive or new sectors of the economy cannot grow fast enough to pay the debt down.
An increase in taxes can force the economy to contract, meaning a smaller tax base, so still less money to pay down the debt, but more debt and more taxes. It becomes a vicious cycle if not arrested with urgency.
The RBC Report stated: “The Government borrowed an additional $818 million domestically in 2016, 15 per cent of which the National Insurance Scheme (NIS) financed, 35.6 per cent from new money created by the Central Bank of Barbados (CCB), and 51.8 per cent from commercial banks’ excess reserves. CBB holdings of Government debt expanded 53 per cent [year on year] in November 2016 to $1.85 billion or 65 per cent of total CBB assets.”
These are signs that the DLP administered Government cannot pay its debt. Additionally, because the NIS currently holds significant amount of Government debt, it means in the long term that Government pensions would be worth less, if it is incapable of repaying its debt.
Therefore, contrary to political posturing, we should not ignore the downgrades from the rating agencies or view them as some product of collusion between the Barbados Labour Party and the rating agencies, or some vast conspiracy theory of international rating agencies to destroy our independence project.
In fact, given the actions of the DLP Government, we may be doing a fine job of that.
The truth is that Government has demonstrated that it is unlikely to be able to repay its debt going forward.
The downgrades also make the repayment more expensive and borrowing difficult in the future.
To restore the reputation of the Government, I would start by giving the office of the Auditor General the staff not only to carry out its function, but additional staff and new powers to independently act as an office for budget responsibility.
The new role would be to keep Government in check as to its spending, providing independent assessment of its estimates and its budgets.
Moreover, the independence of the CBB should not be questioned as it recently has been in the firing of the former governor Dr DeLisle Worrell and the printing of money.
The CBB should be made independent of the Minister of Finance.
If Barbados is to regain a reputation for good economic-political governance, there has to be a clear demonstration that the political leadership understands what good economic-political governance looks like, not only to domestic and international creditors, but important to Barbadians, so people like my friend can trust in Government again.
We too, should challenge ourselves. Instead of asking what Government is for us, we could do well to ask who we are in relation to Government.
I will expand my thoughts on such matters when I give a public lecture on governance and setting out a new model for Barbados in a few weeks.
Dr Ronnie Yearwood is a Chevening Scholar, National Development Scholar and Overseas Research Scholar. He has practised law in London, Brussels and the British Virgin Islands and is an international trade specialist, having published and lectured in World Trade Organisation law. Email: yearwood.r.r.f@gmail.com