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THE HOYOS FILE: Easing the burden


Patrick Hoyos

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It was printing money that got Germany into so much trouble after World War I.
Things got so bad that you needed a wheelbarrow of cash to buy a loaf of bread. The economic slide led Germans to root for the nationalist leader who told them it was the rest of the world’s fault, and you know the rest.
No wonder Germany is not keen on jumping into save the rest of Europe by lending more and more money, which it would have to borrow or print, basing it on its own reserves. But it will eventually have to.
Here in Barbados, we have a Finance Minister who will borrow US$120 million to do studies and reports on how to transform the energy usage of all of us, but can’t find the money to pay for roundabouts at Boarded Hall and Coral Ridge, which have been languishing in the dusty air since July (at least), far less to fix our rapidly deteriorating roads.
With only minor exceptions, Mr Sinckler’s last Budget was about possible relief in the future, not the present, for the suffering citizens of Barbados, over whom the Government has run roughshod.
While our brainy financial guru makes fine speeches about a bright day sometime from now, with brand new incentives coming up for energy, cultural industries and so forth, Barbadians struggle to pay their monthly bills, which are increasing at an alarming rate and being blamed solely on the price of oil and fuel, with the said Government maintaining it is unable to intervene in the market.
And still we wait every day for the Eskimos to arrive rowing their canoes packed full of products to bring us the benefits of shopping at Cost-U-Less.
With the Government petrified of getting a debt downgrade from the almighty Standard & Poor’s, who could expect it to unveil innovative policies that might help people now while also building the economy and a better future?
For example, the ancient regime of duties payable on vehicles remains in place, based on engine size, with virtually anything above 1600cc falling into the high end category of taxation (except light trucks). There has been no reduction in the duties to encourage consumers to buy the more environmentally friendly and less gas-guzzling hybrids.
Note to Mr Sinckler: You don’t have to pay US$45 million for me to share with you that these vehicles would reduce our fuel import bill if they were widely purchased, so a trade-off in duties could reap you greater rewards in your effort to cut the national fuel import bill and take pressure off the reserves.
But you know that already, surely. You just are unable to do anything about it.
As we consider our dismal economic future in this depressing scenario, it is heartening to note that the Scrooge of global finance, the International Monetary Fund, is now actually advocating government spending to help kickstart the world’s economies.
The IMF is encouraging countries to get into more debt in order to relight the fire of the world’s economic engines.
Pity it is speaking out after the Barbados Budget was read in Parliament.
In Britain, the move to “ease the squeeze” is gaining momentum as well.
According to the Times of London (Sept. 28), the Bank of England’s Monetary Policy Committee is moving closer to more “quantitative easing,” under which the bank “purchases government bonds with newly-created electronic money”.
That is today’s equivalent of printing paper money. The massive credits flowing into the Treasury would be used to sustain or implement job-creating or sustaining programmes.
Says the Times: “The euro-induced strains in financial markets, coupled with softening factory output, have led to a stark re-assessment of the economic prospects around the world.”
It also noted that in the United States, many are calling for the Federal Reserve to “boost its own money-printing programme”.
Within the Caribbean, Governor of the World Bank and the International Monetary Fund for Dominica Rosamund Edwards has appealed for government policies in the region to “reignite private sector confidence and to support the stability of the international financial system”.
What the region needs, he says, is a “well-defined strategy to enhance economic growth and stimulate employment,” which means borrowing or printing more money. In his words, it is about “seeking out space within our budgetary envelopes to sustain growth-promoting investments”.
Translation: To ease the burden we are under, more money will have to be found. As the IMF suggested last week, austerity measures alone are not going to be enough to get us out of this one.
Mr Sinckler should realise where his Budget is taking this country and do something about it now.
All the finance ministry has done by parking itself in the middle of the road, and demanding more and more money from people who use it, is to slow down the traffic and cause many to stay at home.

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