I am writing this letter before the Central Bank releases its 2013 first quarter economic report and I am predicting – and I sincerely hope I am wrong – that our economy has performed badly with negative growth and a first quarter result the worst in many a year.
Why should I be predicting such a bad performance? The answer is simple – economic growth cannot be achieved with taxation at the present level and our Government must come to the realization that its first-term policy of deporting the alleged 20 000 illegal immigrants, who were in reality 20 000 consumers being forced to leave the marketplace, has boomeranged and no doubt caused economic havoc to our island.
Indeed the reduction in value added tax (VAT) revenue, a consumer tax, even with a rise in the rate is ample proof that there are fewer consumers than in previous years contributing to VAT.
In addition, the policy of no layoffs in the public sector and the use of National Insurance Scheme (NIS) funds to make up payroll cost is akin to a family earning $5 000 a month with $7 000 in monthly bills and using a credit card to meet the shortfall. How long will that economic wizardry last? How long can Government continue to raid the NIS funds or continue to fail to pay private sector creditors in a timely manner?
High taxation and reduced numbers of consumers, including tourists, have caused the closure of many private sector businesses and will, I’m afraid, continue to do so until Government wakes up to the reality that those policies are the cause of this long-term recession and that increased taxation is counter-productive.
To believe that the construction of two high-rise apartments and the promise of a cruise terminal and a boardwalk will somehow return our economy to growth or create new jobs is not only wishful thinking, but a clear path to tread to invite the International Monetary Fund (IMF) and give power to these foreign-accent gurus to wreak havoc on poor defenseless Barbadians as they did in 1992/1993.
The cost of Government must be reduced and the only way to do so is to jettison loss-making departments. What indeed is the magic of owning a television and radio station and, in order to do so, waste the taxpayers’ hard-earned money keeping them open?
What is the magic of owning the Hilton Hotel? Why not sell and use the sale receipts, which would most probably be in foreign exchange, to fund other worthwhile projects that would create lasting jobs, not part-time construction jobs?
Why not give grant incentives to the owners of all closed hotels and restaurants to use to refurbish and reopen their now derelict properties?
What is more depressing than driving through St Lawrence Gap and realizing it is now more or less a derelict street? What is more depressing than passing boarded-up hotels and restaurants and stalled building projects with hoardings rusting? Grant incentives will help to create hundreds of jobs virtually overnight.
I have more than 50 years’ experience in business in Barbados and it pains me to be aware of how many businesses have either closed or are about to close for the simple reason that consumers have little disposable income to spend that would help to keep a business open or profitable.
But what is even more depressing is to be aware that no longer can so called local bank managers make business loan decisions and are now reduced to postman status when applications for loans are made because they are now compelled, by loan levels, to report to the postmaster general in a foreign country, who has absolutely no knowledge of the applicant, to receive permission to grant a loan. And we are an independent nation of 46 years!
Is colonialism back again?
Perhaps, in closing, I must mention that the most disappointing aspect of the present economic situation is that Government has no apparent intention to change course and, until the IMF arrives, the rich will continue to live well while the poor steal gold and old iron.
Lord, have mercy on Barbados!
