WHAT MATTERS MOST: Share data with public
It is unbelievable that a 19-month fiscal adjustment programme was announced on August 13, 2013 and an entire year has gone by without a comprehensive report on the status of the programme to the public.
Furthermore, there is no certainty of a Budget presentation. This failure to report is consistent with what the governor of the Central Bank has done in not having a Press conference on the economy. The latter is to be replaced by a panel discussion.
In his first discussion, Governor Dr DeLisle Worrell reported that the Barbados economy declined by a paltry three per cent over the last six years. Not even the least numerate among us would believe that a mere fall of $6 million in real GDP (1974 prices) per annum could have caused the severe economic meltdown experienced since 2008.
The unemployment rate is now hovering around 14 per cent, more than double what it was in 2007. The country’s national debt has almost doubled over the same period. The fiscal position is at its worst ever as a result of excessive spending and some contraction in Government revenue despite the increases in old tax rates along with new taxes.
From the perspective of the international financial markets, the country’s credit rating is at an all-time low because of persistent downgrading. It is impossible that the dramatic changes in Barbados’ major economic indicators resulted from a mere three per cent decline in real economic activity over the course of six years.
There is now evidence that shows the Barbados economy declined by substantially more over the last six years. The evidence that is rather more realistic and based on much sounder statistical techniques has been made available to the authorities. The time has come to share it with the public.
The tremendous disparity between what the Central Bank governor is reporting and what the Barbados Statistical Services has estimated ought to be a major source of concern to the economic policymakers. Since the published diagnosis is out of touch with reality, the policy prescription is unrealistic in its scope and magnitude. No wonder the Government is in its fourth year of fiscal adjustment with no meaningful results to show.
It does not take a rocket scientist to determine that the Barbados economy contracted much more than three per cent in real terms over the last six years. It only takes an informal survey of households and businesses to appreciate the true state of the economy. Barbadians are in survival mode; businesses are uncertain and the Government has been broke since 2011.
Absolute pride in work
When the last observation was made in 2011, some commentators thought it was purely political. Time has revealed that fact and much more about the Barbados economy. There is no need for me to be irresponsible in commenting on the Barbados economy; I am first and foremost a professional economist and I take absolute pride in my work.
The readers of this column are invited to reread numerous articles which commented on the economic growth statistics, the national debt figures, the printing of money by the Central Bank and the state of the country’s foreign reserves among others. Barbados’ economic conditions have worsened and there is a need for more commentary, not less, especially from those who have created the crisis and administered the bitter medicine.
In this context, the decision by the governor to hold two panel discussions per year is farcical though not surprising. This is the same governor who conducted his own unemployment survey when he did not like the figures of the Barbados Statistical Services.
The same governor reported the gross foreign reserves rather than the net reserves, in spite of borrowing a short term loan of $200 million from the Deutsche bank in June 2010. He also advised the Government that it could run a much higher fiscal deficit in 2011 when the deficit was already in crisis.
Following on the announcement of the 19-month adjustment programme, it was revealed in the Estimates debate in March 2014 that the fiscal deficit was more than double what it was projected to be in August 2013.
In the circumstances, the country’s deteriorating economic health demanded ongoing surveillance, but both the minister of finance and the Central Bank governor have taken the opposing view that less is more.
The lack of surveillance has caused the economic virus to spread to the country’s social veins with the imminent threat of widespread paralysis across both systems. Where there is no vision, the people perish.
Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party adviser on the economy.