Chris Sinckler has had a change of heart. Having strenuously rejected the idea of a stimulus programme as recently as during the three-week general election campaign that ended last month, he has now embraced the idea to the tune of $600 million.
I’m pleased the Minister of Finance finally saw the wisdom of infusing money into the economy to stimulate business activity. This decision was long overdue, but one suspects he would quip, “How long is too long if it’s good.”
With a $600 million price tag and the prospect of 1000 new jobs, the measure does promise good days ahead. Artisans who have been complaining about a slowdown in the construction industry, and who consequently have been unemployed or finding it difficult to get steady work, will be happy. So, too, will the food van salespeople who cater to these workers. The trickle-down effect to households, stores, shops and restaurants should generate the kind of robust business activity that would be positive for the economy.
Though I welcome the move, I wonder what impact this volume of spending will have on the country’s overall economic position. That is, we already have a high fiscal deficit caused by Government consistently and deliberately borrowing money monthly to pay its bills, as it continues to spend more than it earns. Wouldn’t this new package worsen our fiscal position even further?
I wonder, too, about the amount of foreign exchange that would be needed to sustain this building boom. It is well known that apart from sand, cement, water and labour, most of the other components associated with construction are imported. You may recall that Sinckler, the Governor of the Central Bank Dr DeLisle Worrell, and the Government’s advisor on economic matters, Sir Frank Alleyne, have repeatedly warned that protecting the foreign exchange reserves was paramount in the stabilization of the economy. How, then, can this $600 million initiative not cause a depletion of the foreign exchange reserves when it was stated that the Opposition Barbados Labour Party’s (BLP) $90 million stimulus plan would have done so?
One expects as the debate on the 2013-2014 Estimates of Revenue and Expenditure continues in the House of Assembly this week, that Barbadians would be told why Government’s stimulus package though six times more costly than the BLP’s tax breaks’ idea to put money into people’s pocket is better and would be more effective.
Sinckler did note when he presented his stimulus package that the BLP’s plan was somewhat like the one pushed by St Lucia’s Prime Minister Dr Kenny Anthony.
“In St Lucia, the new government in attempts to provide fiscal stimulus through tax concessions and tax breaks and exemptions – a.k.a. money in your pocket – as well as through employment-creation programmes resulted in the widening of the overall fiscal balance and an [increase] in the country’s debt to GDP (gross domestic product) ratio to uncomfortable levels by November by admission of St Lucia’s own prime minister,” Sinckler told the House.
Another aspect of Sinckler’s about-face that is pregnant with questions is the public/private sector projects with financing totalling $355 million. This sum is not included in the Estimates and does not figure in the Government’s overall liabilities. Didn’t this governing party, when it was in Opposition, argue that this practice was wrong and did not allow for proper accounting? Didn’t they say then that the financing of HMP Dodds Prisons, the Hall of Justice, and the abandoned flyovers for the ABC Highway by this method helped lead to the degradation of this country’s financial position?
The last major area that Barbadians would want to be apprised of in the Estimates is the soundness of Government’s finances, given the revelations of the 2012 Auditor General’s report, which was laid last Tuesday in Parliament.
That report, which examines Government’s main accounts and reports on failures by agencies to observe accepted accounting practices, shows Government’s finances to be in a mess.
The situation is so bad that the Auditor General Leigh Trotman, in summary, said of agencies, including the National Insurance Fund, whose audit is eight years in arrears: “In my opinion the financial statements presented for audit did not, in all material aspects, fairly represent the financial position of the Government of Barbados as at March 31, 2012.”
• Sanka Price is an editor at The NATION.
