I AM GRATEFUL to Trump adviser Kellyanne Conway for coining a phrase that would allow me to avoid the laws of defamation, as I cannot accuse any person in the public sphere of telling lies! Such assertions aside, we continue to have a major problem in Barbados regarding our understanding of the true state of the economy and it forces us to come to the conclusion that one of the sides is presenting “alternative facts”.
Traditionally, information on our economy comes from two sources, namely the Central Bank, with the expectation that it will be objective, and, secondly, the Ministry of Finance, which will understandably “polish” any data it releases in the interest of broader political objectives. We can generally navigate a path between these two sources to reveal the true picture upon which confidence is built in the interest of supporting economic stability.
In this regard, we have recently been having some unprecedented challenges, where the picture that emerges from the Minister of Finance is generally positive, while the perspective of his Opposition colleague and more recently Governor of the Central Bank Dr Delisle Worrell and leaders in the private sector seems to be suggesting that all is not well. Finance Minister Chris Sinckler is easily one of the best communicators in the Democratic Labour Party (DLP) and he has been consistent since assuming office that David Thompson’s Medium Term Fiscal Policy Strategy, which was tweaked by his 2013 Budget, has been working well, our economy is on a growth path and our foreign exchange cup generally “runneth over” although there may be fleeting moments of scarcity.
Our Central Bank governor has traditionally spoken “in-step” with Sinckler; however, he has recently stopped taking questions from the press and we must rely instead on his statements, which also recently seem at odds with the minister of whom he is “a creature”. The first evidence of this came when Worrell suggested Sinckler might need to consider foreign exchange restrictions as part of his 2016 Budget.
Sinckler rejected this advice and stated on August 16, 2016, that in the next two months Barbados’ reserves would be boosted by US$200 million, bringing those reserves above the one-billion-dollar mark. Six months later (not two), the Central Bank, is reporting a reserve level that is the lowest in 14 years and is, of course, inconsistent with Sinckler’s projections.
If we take our minds back to 2013 we would recall Sinckler’s finest hour regarding economic objectivity. This was a speech he made hot on the heels of an election campaign in which the DLP confounded me and other analysts with a shock victory. Sinckler them promised a government stimulus of $600 million revolving around a bounty of projects slated to start in “months” and reaffirmed the party’s commitment not to send home a single worker.
Within months, Sinckler returned to Parliament and announced Government’s intention to release not “one” but 3 000 workers, and four years later the vast majority of these projects associated with the stimulus are yet to commence.
On the other side, Opposition Leader Mia Mottley and her economic team have been consistent before 2013 in making the point that our debt and deficit were unsustainable and indeed proposed a programme of divestment under Owen Arthur’s leadership. This programme was, of course, rejected; however, the opposition has continued to make the point that we need to urgently address our debt situation and should consider an IMF programme sooner rather than later since our bargaining position would be enhanced if we went before the IMF became aware that our reserves had fallen below the significant 12-week mark.
The opposition maintains that we are facing a crisis while the government maintains that all is well and reiterated the August 2016 promise that $250 million would be forthcoming “in-weeks.”
Some analysts believe this situation is a straightforward one where the Freundel Stuart administration will shortly be forced to enter an IMF arrangement and devalue with the attendant political consequences. Such persons take little comfort in Stuart’s recent assurance since this the same person who vowed that he would not impose user fees at the University of the West Indies (UWI) or send home public workers.
I tend to take a different approach that is based on Stuart and the DLP’s history of “kicking the can down the road”. The end of the political road is less than one year away and Stuart is already framing the election narrative which is not dissimilar to that of 2013. Naysayers are predicting gloom and doom, while he has skilfully navigated the economic waters through five years and proven his critics wrong (again). Should he be re-elected he will continue to skilfully guide us, while a BLP government would run to the IMF with all attendant consequences.
The question is, therefore, which set of alternative facts would we believe this time?
Peter W. Wickham is a political consultant and a director of Caribbean Development Research Services (CADRES). Email: peter.w.wickham@gmail.com
