Barbados’ worst five years
Barbados has experienced its worst five years – 2008 – 2012 – of economic growth since 1990 – 1994. However, it has also experienced its best five years in terms of foreign exchange reserves cover per week of imports as measured by the Central Bank of Barbados. What a most unlikely, but true, observation.
The country needs to take a new look at itself.
In 2009 alone the country’s imports declined by almost one billion dollars. Since then our imports have not recovered as the economy is now smaller than in 2007. In the most recent Economic Review, the Central Bank admitted that “reduced domestic demand contributed in part to lower retained imports, primarily consumer and capital goods”.
So, excessive taxation has reduced the spending of Barbadians. The reduced spending has contributed to the best foreign exchange reserves cover. The Barbados economy is, however, more than foreign reserves. It is also about economic growth, which yields more jobs, taxes for Government and wealth creation.
Refusing to give tax relief has nothing to do with the international economies but with the excessive spending of Government in 2008 and beyond. The excessive spending has suppressed growth because it has been at the expense of taxpayers.
The Government has consumed, not invested. It has consumed while denying others the right to do so. And without consumption, there is no investment.
Apart from having the best foreign reserves cover ever, the Central Bank has $328 million in excess of the international minimum standard. The proposal to give Barbadians more spending power cannot be described as reckless. It is absolutely necessary and affordable.
The Government has been printing money to feed its consumption, and it is known that this is a more deadly way of eating up a country’s foreign reserves. But the economics of fear has taken hold.
In the meantime, the country’s confidence has sunk to a new low. The situation has to be reversed and the best way to do so is to send a signal that we are able. At this time, an obsession with the level of foreign reserves is a mental rather than a real fear that inspires a focus on devaluation rather than economic growth.
The politics of fear has now found a willing partner in the economics of fear. Our past has once again come back to haunt us. We have lost our confidence.
As early as 2007, an economic downturn was on its way. The Government explained the circumstances; the Opposition spoke to corruption during the campaign. The evidence eventually revealed the real corruption.
The new Government gave way and gave in to the external forces and refused to look within itself. Perhaps it was afraid to see its failure to prepare for the job of governing. Perhaps it recognized that the tools required to construct are more difficult to nurture than those required to destroy. There are horses for courses!
The country confused promise with performance. But we have historically fought adversity. So what went wrong?
The country’s leadership refused to accept responsibility. It ignored the bigger picture and focused on delivering the fatted calf. The problem is that the calf lost weight because the leadership chose to accept the most convenient diagnosis.
Having administered the wrong medicine, the leadership continues to bury its head in the sand. Now that it has sought outside help in its most desperate moments, it refuses to share with Barbadians the prescription, which includes fiscal consolidation.
As time draws nigh, the leadership is once again refusing to lead, preferring instead to let the Opposition put the issues on the table. The intention is to once again be in a position to oppose.
The evidence is clear. The country wants leadership; instead it is getting fear. Only a sleeping giant could believe that men and women whose only chance for social mobility was proper education and health care would preach the privatization of these two sacred pillars of progress.
Barbados is truly at the crossroads. It needs to decide which way to go. It could choose to do nothing, as is happening. It could choose a course of workers’ enfranchisement. Let Barbadians go to work not just for a salary but for a dividend. It is the safest way to change the mindset of the workers and get value for money spent in some of the statutory boards.
It is a win-win model for progress.
• Clyde Mascoll is an economist and Opposition Barbados Labour Party spokesman on the economy. Email [email protected]