It is now crystal clear that however we got here, the local economy is not only experiencing difficulty and choppy waters; but that it is a major task pulling the ship of state, so to speak, into calmer and more economically balanced waters, and away from the rocks of disaster some of which are anathema to ordinary Barbadians.
The shock of the triple notch downgrade by Moody’s has certainly brought home forcibly to all of us, whether we are still employed or not, how grave the situation is, and the prospect of Standard & Poor’s following Moody’s with its downgrade brings an added dose of discomfort.
This kind of news puts a premium on the most careful management of a country’s economy since the cure of austerity is always much worse than the careful management of prevention.
There is little point running high deficits and then having the headaches and pain of restoring equilibrium. But even so, we feel that some perspective is necessary and that panic buttons do not have to be pressed, even if it is minutes to midnight.
Minister of Finance Chris Sinckler told us on Friday that the Government was doing everything possible to avoid any worsening of the situation. He also drew attention to a number of major projects which are due to come on stream soon, and help to boost growth, but he has cautioned that growth will not return to the economy overnight, nor can we expect 3 per cent growth in six months because it will not happen.
We understand the minister’s problem. His colleague Senator Jepter Ince disclosed in the Senate last week that the Estimates showed the deficit was 11.8 per cent; Moody’s said it was above 11 per cent.
A deficit of that size will destroy any business, and even in the event of the printing of money, it will also wreck an economy by eroding its foreign exchange. It is simply too high and while it is wrong to slavishly follow the dictates of any rating agency, they have a point which is to be ignored at our peril.
Some kind of deficit is required in these small economies. That is the nature of politics and that is acceptable, since governments can hardly manage economies as if they are running a commercial enterprise. Such exercises in political economy should ideally be a judicious mix of politics and economic principles.
If the rating agencies are saying that the current job cuts and revenue-raising efforts are not going fast enough then they feel that we are nearer to the rocks than we may know. It would have been better if we were not here, but however difficult the situation, every Barbadian now has a duty to do his bit to help the country over this mountain.
Deficits do not just happen, and their reduction, just like their creation, may be rooted in policy; and we must wage a war to retain sovereignty over our policy at all costs. That may be the lesson we should have learnt 20 years ago. But what have we learnt from our history?
