ON THE LEFT: Economic confidence at a low point
“The economy is measured by a floating currency called confidence. It is the highway upon which the vehicle of investment must of necessity travel. However, just as vehicles cannot travel on unsafe roads, investment will not flow in a climate of uncertainty,” – Lalu Vaswani, President of Barbados Chamber of Commerce & Industry.
conomic agents (businesses and households) require the ability to plan their affairs over at least a three- to five-year horizon in order for any economy to thrive. Though no policy is ever completely set in stone and can be adjusted depending on the prevailing circumstances, the level of certainty provided by forward thinking and forward planning policymakers is a fundamental tenet of sound economic management.
Without going into detail, the reader can assess the soundness of some of the economics-related events just for 2013.
In January, Central Bank Governor Dr DeLisle Worrell said the economy was stable and that stimulus would not work in Barbados because it would drain the foreign reserves. In March, Minister of Finance Chris Sinckler said the Government was introducing $600 million in stimulus during the Estimates debate.
This policy statement received no strong public rejection by the governor given his previous assertion. In April, Worrell stated during the 2013 quarter one economic review that the Medium Term Fiscal Strategy was off-track and needed to be brought back on track before flip-flopping the very next day on the matter.
Then in June at the national consultation it was said that Government expenditure needed to be cut by $400 million to arrest the rapid decline in foreign reserves and to avoid devaluation.
In August, during the budget debate, Sinckler introduced the consolidation tax, effectively reversing the income tax policy in effect for just about one year and stated that no supplementaries will be issued from the Treasury. However, on the second day of the debate Leader of Government Business Maxine McClean introduced a measure to supplement roadworks for the Ministry of Transport and Works. Subsequently, almost all
of the ministers have fallen over one another issuing public statements that commit Government to further spending.
The icing on the cake is Prime Minister Freundel Stuart ordering a special analysis from the Director of Finance, as a result of which he reassured workers of their job tenure but undoubtedly committed the Government to continued spending. It is therefore not unreasonable to conclude that the minister didn’t ask the right questions in preparing the Budget, thereby prompting the intervention of the Prime Minister.
I trust by now the reader has reached a conclusion regarding the soundness of economic management but in case you haven’t, I leave you with this one. The old people say, “When you don’t have anything good to say, it’s best to say nothing at all”.
It is instructive that during the no-confidence motion against Sinckler in Parliament last Tuesday, not one Member of Parliament on Government’s side, including the Prime Minister, rose to verbally express their confidence in Sinckler.
Not only is the Barbados economy suffering from a lack of confidence, but the Government itself has no confidence in the Minister of Finance.