THE ECONOMY CONTINUES to generate controversial debate between the political parties, but the man in the street or on his job wherever it is, and the housewife trying to cut and contrive in the supermarket aisles, must by now be asking some serious questions about the state of the economy and the future of this country.
One does not have to be a rocket scientist to understand that no country likes to be the subject of successive downgrades, and neither for that matter does any Minister of Finance like these things to occur because the harsh reality is that such downgrades can have a damaging impact on the financial reputation of a country.
Damage to the country’s financial reputation often means higher interest rates sometimes on existing loans, which may mean less money in the government’s hands to carry out the many socially cohesive and desirable things that are so necessary in a small developing country.
A question which will arise is whether the several downgrades could have been avoided and at what point is the Minister of Finance likely to lose his portfolio if the situation continues. These questions may arise as part of the accountability of our governance because if the present situation could have been avoided, one is then forced to conclude that the policies pursued in the recent past may have been the wrong responses to the challenges presented by the recession.
The current situation may not be irretrievable, but a prescription designed ever since 2010 to deal with the fiscal deficit in particular and to improve the credit rating of the country among other things, does not appear to have worked; or if it has worked, it has not been to the satisfaction of the minister or the rating agencies.
In this year’s Budgetary Proposals, the minister conceded that “our debt levels are too high and climbing” and that “our fiscal deficit is too large and must be better consolidated”. And that as a result of the fiscal deficit and high debt levels “our growth levels are being seriously restricted as we cannot find the fiscal space to assist in further unleashing growth”.
He also said that because of these three critical factors “our social development system is increasingly being compromised as the cost of sustaining it becomes challenging”.
Such was the position in August at Budget time; and while we may accept for argument’s sake the minister’s assertion that the policies he unveiled in August are not a redo of failed policy attempts over the past “three years” or “eight years for that matter” we are not surprised that the rating agencies have spoken as they have.
If we express concern about accountability, it is because even given the challenges which may have upset well laid plans of the Ministry of Finance; we draw further attention to the need to contain public expenditure in relation to the issue of privatisation which was made into a political football during the last election.
This was done by the current administration at a time when it was clear to both the Government and the Opposition that it was a serious cost-cutting option which should never have been taken off the table – but political expediency won the day.
Political will is now required to ensure that a carefully considered privatisation scheme aimed at giving Government greater grip on reducing the fiscal deficit and containing the debt, is placed on the political front burner. And the ongoing sale of the Barbados National Terminal Company Limited is not a total solution.
