TODAY’S TOPIC presumes that the Government has an economic plan for Barbados, and my first response is to confirm that there is such a plan. Given such a plan, the topic can be approached from two perspectives. Firstly, has the plan been properly articulated? Secondly, does the plan have the potential to significantly alter the Barbadian economic landscape for the better?
At the public/private sector consultation held on March 1, Government unveiled its Medium-Term Development And Fiscal Strategies (for the period 2010 to 2014). The long-term vision of the development strategy was A Fully Developed And People-Centred Society, Through New Development Pathways. This strategy highlighted the importance of maintaining macroeconomic stability through sustainable fiscal and debt management, and the need for new areas of economic growth. The major objectives of the fiscal strategy were to reduce the fiscal deficit to GDP ratio to 2.1 per cent by the fiscal year 2013/14, and to reduce the public debt to GDP ratio to around 70 per cent by the fiscal year 2017/18.
The development strategy is broad in scope and ambitious, and it will be nigh impossible to fully implement it in the period 2010 to 2014. It is essentially based on the economic growth and development model that has been pursued for the last 30 years or so. That model has served us well, but if the economy is to become more flexible at times of severe adverse economic events, some fundamental changes have to be made. Major issues that need to be addressed and fleshed out include the funding of education and health services, the environment for doing business, Central Government transfers to statutory corporations, and reform of the public service.
In the absence of significant progress in those areas, the Government will always experience severe difficulty in responding to major adverse economic shocks. The fiscal strategy is partly a response to the economic developments experienced in 2008 and 2009, but it also recognises that the fiscal model pursued in the past is not sustainable in the long term. Given the current economic situation and the short-term prospects, it will also be virtually impossible to achieve the objectives of the strategy. Because of their scope and complexity, it is difficult to articulate multi-year economic strategies and plans in a way that most people can easily understand.
Such strategies and plans are best seen as statements of intent that are activated at the appropriate times and quite often after considerable preparatory work. Given the factors that influence decision-making by governments, it is not a straightforward task to set deadlines for the implementation of such strategies and plans and to stick to those deadlines. The best that can be aimed for is the successful articulation of them in an incremental fashion at specific times – for example, annual budgets or policy statements, or in response to various economic developments.
The economic situation of any country at any time is a reflection of the strategies, plans and other policies that have been implemented in the past. Those strategies, plans, and policies cannot be changed overnight. Given all that has been said about those strategies, plans, and policies, given the economic stagnation that is currently being experienced in the island, and given the uncertain short-term economic prospects, the time has either come or is fast approaching for the Government to provide a clear and unambiguous articulation of the way forward over the next year or so.
