Houston, we have a problem
With both the central bank governorand the new minister of commerce having gottensafely into their lifeboats, it was only fitting tha tthe captain of finance himself should be the lastman to leave the sinking ship of Barbados’ current economic policy.
The other members of the party, including Admiral Dolittle himself, had never really boarded and sowere already safe and dry.
In fact, so confident wasthe admiral in his captain’s handling of the fiscal ship of state, that little had been heard from himon such matters since the election campaign a hundred days before.
And so Minister of Finance Chris Sinckler lastweek cast off the rusting chains of the MediumTerm Fiscal Strategy (MTFS) in its current unsustainable form and talked about cuttingspending. For real this time.
Said Mr Sinckler: “When we execute this comprehensive exercise of fiscal consolidation,we will have to address all areas in which wedo business.
“We are going to look at the plethora of statutory entities which we created prior to 2008 and ask ourselves do we absolutely need all of them andhow can we build synergies across them that allowus to achieve their mandates but with less expenseto the public purse.”
And while he did not say which ones specifically,a bit earlier in the speech he said many entitiescreated under the Owen Arthur administrationhad helped to saddle Barbados with the public debtit was now carrying:
“A lot of that (debt) has gone into physical development and so-called capacity-building activities guaranteed by Government through its statutory entities and have now become contingent liabilities.
“The Kensington Ovals, the judicial centres, the Coast Guard stations, the oil company terminals and, yes, right here in the Hilton are all classic examplesto which I refer.
“And not all of them have delivered on thepromise either. Ladies and gentlemen, they havehad a cumulative impact on the country’s overall budget deficit and macro-debt profile.”
There might not be blood, but there wouldbe cuts.
And at the same time he warned the privatesector – which had long been calling for the Government to stop its wasteful spending –to be careful what they had wished for becausethey were going to get it.
Many private companies, he said, were sodependent on Government procurement that they operated more like its departments rather thanoutside suppliers, and these would be hardest hit.
As I understood Mr Sinckler, the abject failureof the Government’s economic policy was nothing
to do with the policy itself. In fact, the resultsof the MTFS were mixed – you know, a good yearhere, a bad year there. Definitely not a failure.
And its self-destruction in 2012 was not because Government had overtaxed the population into economic retreat, thus making the situationworse, but because the global recovery had lostits momentum.
An anomaly that was not pursued was why, withthe global economy coming back this year, Barbados was still expecting a flat GDP performance.
Still, before one can change course, one has to first admit that one is on the wrong path. And even when one is prepared to continue on a path widely seen tobe producing the wrong results, it sometimes takesa loud bang to make one take notice.
The loud bang was the Central Bank’s assertionthat the MTFS was dead. Put in far more subtleterms, of course.
Last week the country finally heard Chris Sinckler’s version of “Houston, we have a problem”. And despite the obvious difficulty he had verbalizing it, couchedas it was in Combative Chris rather than Suave Sinckler style, it took a big man to come to termswith the fact that his macro policy, his flagshipMTFS, would never produce the outcome requiredby its own self-definition, and that the Government simply does not knowwhat to put in its place.So, of course, there willbe a public consultation.
No one could ever doubt Mr Sinckler’spatriotism or his desire to see Barbados safelythrough the economic problems it faces, or his brilliance as a policy analyst.
But how he picksup the pieces and crafts a newand hopefullysuccessful fiscal plan for the countryis perhapshow his tenure as Minister of Financewill be measured in the future.
It is a difficult task made harder by thelackof leadership at the very top. The admiralis out to sea.
• Pat Hoyos is a publisher and business writer.Email firstname.lastname@example.org