It hit like a bombshell, when Barbados’ Central Bank Governor announced that a $400 million reduction in expenditures is needed immediately. These cuts are necessary to offset the declining international foreign exchange reserves.
These declines so threaten the exchange rate, that it could cause the devaluation of Barbados’ currency. An anchored exchange rate provides benefits that have long been taken for granted.
According to the Central Bank, it protects the real value of national savings, provides a currency stability that acts as an incentive for investment and provides evidence of Government’s commitment to fiscal consolidation.
Suddenly, people who would have thought of themselves as protected by ensconced positions, perks and pensions, recognize they are now vulnerable. Traditionally, in Barbados, there have been people who can “make a call” to a well-placed crony to obtain fast action or forestall discomfort; they can no longer do so, as people “break for themselves”.
There are so many “consultations” happening that it is like a merry-go-round. All asking the same question: “where can we make the most effective cuts” to stave off this disastrous trend?
Exhortations from Government say that the private sector needs to invest more instead of asking for hand-outs or concessions. The private sector is saying: “We are doing all we can to hold strain but there are too many obstacles and not enough leadership.”
Labour is more quietly saying: “Remember the promise to retain jobs.”
In the face of all this, the refrain continues; make changes but not at me. In some places such as statutory corporations, subsidized bodies and within Government itself; it is apparent that jobs and subsidies will be cut or eliminated. The private sector has already released itself from the job retention pledge and the unions are now sending messages that job loss is inevitable. Everybody still hopes it will happen somewhere else.
When I look at the Central Bank’s discussion document titled The Barbados Economy: Challenges and Opportunities, it cites
• Tourism
• International business and financial services
• Agriculture and agro-processing, and
• Alternative energy production (green energy); as the engines for growth.
The document also identifies 16 “most problematic” factors for doing business in Barbados, ones that inhibit growth and competitiveness. The top four are:
• Inefficient Government bureaucracy.
• Access to financing.
• Poor work ethic in the national labour force.
• Insufficient capacity to innovate.
These have a greater restraining weight than the other 12 combined. All factors require profound institutional transformation to make a sustainable difference. Each of the identified growth engines is adversely affected by these “big four” yet the proposed remedies seem to ignore their impact.
I am reminded of 1985, when the global conscience was stricken with the poverty and devastation in Africa; a special campaign attracted the top artists from around world to produce a single song, We Are The World, to raise money and awareness.
While it accomplished those goals for a while, what I remember the most, is Quincy Jones, the producer, placed a sign outside the studio door that read: “Leave your egos at the door.”
During the Great Depression, “Brother, can you spare a dime” was so rampant, it became a popular song title.
Last week, the city of Detroit declared bankruptcy under a banner that read “Reinventing Detroit”.
Who will put up their hand and say, “let the change begin here”?
