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Investment creation a must


rhondathompson, [email protected]

Investment creation a must

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The international economy continues to present problems to policymakers and technocrats as they struggle in the various capitals of the world to bring a measure of calm and confidence to investors and the capital markets.
This recession is said to be the worst in 100 years and many are the efforts being made to kill the beast or, at least, to tame it. We are also affected by the turbulence, for we live in an interdependent world and tourism and associated services are our business.
One of the recurring questions is whether stimulation of the economy is the remedy or whether some kind of austerity programme might be the answer. Some economists think that stimulus is the way to go. Indeed, the United States’ initial solution was pointed in that direction for it was a stimulus of sorts that rescued the automobile manufacturers.
Unfortunately, economics, though branded as a science of sorts, is nothing more than a reflective study of people’s behaviour and while some people in the market may respond positively to the creation of a stimulus package, others might regard such as the wrong solution. In a sense, the proof of the pudding is in the eating.
Within the next fortnight, our Minister of Finance will present his Budget, and many are the expectations that some relief may be part of his package of proposals. His will not be an easy task because, as we have seen before, problems elsewhere mean problems right here.
The speed of modern communication brings the news, both bad and good, to every corner of the earth, and since confidence is a critical input in investment and financial decisions, the impact of economic problems in Greece or Spain can have as devastating an impact as the slowdown in the number of tourists who come to us from our established markets in Britain and the United States.
The announcement last Thursday that the British government was pumping £140 billion (BDS$425 billion) into the banking system for on-lending to small businesses, which might be finding it difficult to get lending for business purposes, has generated a lift in the stock market and it is clear that some optimism has been generated by that policy initiative.
Stimulus may have some advantages but a mixed programme of cutting the deficit while stimulating growth and confidence seems a convenient way of rebuilding confidence and reducing the inhibiting burden of debt caused by public overspending, which has so often been the wont of governments catching at the vote.
We are conscious of the burden which must be carried by every minister of finance these days. The local and international economies have to be considered while the need to regionally integrate our economic behaviour is still a major factor as well.
In the upcoming Budget, the mix of direct and indirect taxation will have to be carefully balanced. Incentives to encourage growth will be needed at the same time as the demands of the public revenue must be met; and in a small open economy with vulnerable groups, the safety net imposes demands on the ability to reduce the deficit too quickly.
The bottom line is that it is in the national interest that investment in the local economy be encouraged. The recessionary problems are a fact of life but just as the British have found a way, as they put it, to “partially insulate” their economy from the impact of Greece’s collapse, some “partial insulation” of the local economy may merit more than casual consideration.

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