EDITORIAL: ‘Within our means’ is key
Speaking on Wednesday last at a Rotary Club-hosted lunchtime lecture on Maintaining Policy Independence at the Accra Beach Hotel, Barbados Central Bank Governor Dr DeLisle Worrell told Barbadians they have to live within their means as far as foreign exchange goes, and have to limit spending so that the demand of imports does not exceed the expected foreign exchange inflow.
First of all, he made it clear the message of his “presentation was that our exchange rate is secure and is protected by adequate foreign exchange reserves” and “that gives us policy independence”.
One does not have to be a rocket scientist to understand Dr Worrell’s message, though some of us may baulk at the implications, since it may require some self-imposed fiscal discipline on the part of individuals. And yet all would be glad for his reassurance, because none of us would wish that local politicians and other authorities lose the right to determine in Bridgetown what our economic policies must be.
We may be a small open economy, but we have every right to exercise our sovereignty in deciding the economic growth path of this country through our elected officials and not through the bureaucrats, whether they are to be found in the International Monetary Fund, with its harsh loan conditions, or in the rating agencies, like Moody’s and Standard & Poor’s.
That does not mean we should develop local policies helter-skelter without regard to the realities of the international and regional economic developments; for if we are to maintain our independence of policy, we must pay attention to economic fundamentals, even as we carve our own peculiar path to economic growth.
We are fortunate that the onset of the recession in the last quarter of 2007 saw us with a record level of foreign reserves, for having such a cushion is a key part in our policy choices, and Dr Worrell was very clear on what has to be done in the present situation.
He said: “In the short run, our policy has to be to live within our means, as far as foreign exchange goes. We have to limit spending so that the demand of imports does not exceed the expected foreign exchange inflow.
“If we want to grow the economy looking forward, then we must invest in the things that will earn foreign exchange, because it is only by growing foreign exchange that we can grow the economy in a sustainable fashion.”
We expect that there will be vigorous debate on what are the correct policy options which should be adopted, and in a democracy such debates are required and encouraged, so that choices can be made between competing policies.
Yet, however the cookie crumbles, we suspect that all sides will agree that growing the foreign exchange earning sectors will be absolutely necessary to our future economic well-being, even if there are differences on timing and manner of execution of initiatives for such growth.