We need answers from Government
It is amazing how several institutions of governance in this country have been allowed to govern in secrecy over the last two years.
Very important decisions that are fundamental to the running of this country have been questioned in public but no official responses have been forthcoming.
Imagine this: the Central Bank of Barbados increased the limit on the printing of money to a whopping $500 million. Half of this limit was determined at the start of this fiscal year as the law allows the Government overdraft facility at the bank to be ten per cent of the estimated Government revenue which worked out at just under $250 million for 2011/12.
This policy to increase the printing of money is known to be the most harmful way of eroding a country’s foreign reserves. Yet, the decision was shrouded in secrecy. The truth is the Central Bank of Barbados became a law on to itself – so much so that it created its own unemployment statistics.
It took an outside influence, for the nonsense done by the bank to be dismissed.
In similar vein, arguably one of the most important policies in a small economy – energy policy – was treated as somebody’s experiment, totally out of ignorance, and caused Barbadians to have to pay unnecessarily high gasoline prices throughout the entire year of 2011.
It was identified that the Barbados National Oil Company (BNOC) increased its bottom line by almost $100 million in one year, while motorists paid for a dollar in gasoline and received only 65 cents’ worth.
It was admitted that the company engaged in purchasing gasoline at prices way above the world market prices.
Even though the ignorance was admitted, no one felt sufficiently responsible to provide an explanation of it in public. This company is owned by the taxpayers and it makes no sense to milk them in earning excessive profits via extraordinarily high prices.
Unfortunately, the company is poised to make even greater profits in 2011.
As a result of the failed policy of BNOC, electricity bills have skyrocketed. But the Barbados Light & Power Company does not feel obligated to explain to the public that the real source of the increase in electricity bills is a direct consequence of the nonsense done by BNOC.
Imagine that a fundamental change in the Government’s energy policy has not been explained by anyone; but the change is responsible for a significant portion of the country’s inflation that has nothing to do with international prices.
The situation of the NIS money to be invested in Four Seasons was poorly handled by the last Minister of Finance Sinckler; certainly he has to go. As was noted, there is provision in the law to give the board a written instruction with respect to an investment. Instead, efforts were made to coerce trained professionals to give in to the politics of the day with no regard for the facts.
Again the Central Bank’s role in this affair was stellar and for a reason. The current condition of the country’s credit rating does not allow it easy access to the foreign financial market, and where there is access the cost of borrowing will be very high.
As a result, access to the foreign exchange from the Inter-American Development Bank with regard to the Four Seasons, is an attractive proposition at this time.
In essence, the risk associated with the NIS investing in Four Seasons is worth taking for some to get access to the foreign exchange now.
Again, the public is owed the right to understand the context within which policy decisions are being made on their behalf. The problem is that not enough time is spent trying to understand the issues but quite a lot of time is spent with the peripheral politics in the issues.
What matters most is the marriage between the politics and the economics and no one is naïve to believe that the latter is the “be-all and the end-all.” But the truth is the current DLP administration is clueless about the requirements of governance.
The harshness of this comment gained currency in the recent botched coup, when 11 parliamentarians failed to understand the difference between a majority of twenty and a majority among parliamentarians.
This recent political fiasco is indicative of the Government’s state of mind!
• Clyde Mascoll is an economist and Opposition Barbados Labour Party spokesman on the economy. Email [email protected]