The environment is not good and sometimes you need to slash and burn away stuff for there to be new growth.
We don’t necessarily want to slash and burn everything – that is not what I am saying – but you need to clear away all the debris, see what’s there and start afresh. It was important from a confidence perspective for the Government to be able to achieve credible results in an environment where you are actually engaged and information is flowing freely back and forth and at every step you analyse targets, whatever those targets happen to be.
We know the financing, in terms of interest payments of Government, has increased significantly in the last few years. We are operating in an environment where we have to create jobs but we can’t create jobs and do business, generate business, while at the same time the demand for your resources now significantly outweighs the returns for any new investment that you would have to make.
In the current adjustment programme the revenues are underperforming and we are not seeing any real movement on the expenditure side so the gap still has to be closed even after we have done all the things that we have done before, and I think that we need to have more clarity, see more urgent action and credible results.
We already have lots of liquidity in the system. What we have to do is to find a way to better deploy that level of liquidity so that the private sector can actually grow and earn more foreign exchange. So to some degree we have to think more externally but there also needs to be a policy shift because there are still constraints on the private sector on how much they can invest overseas. It is not going to be an easy conversation because we have grown accustomed to things running a certain way but we are not in that scenario anymore. There has been a structural shift in the nature of the public finances. People still want to invest in Barbados, the country is not going to fall apart, however, the last few years, in terms of the opportunities for growth going forward, can only come from the private sector. Although the Government has been able to cut its expenditure, some of the impediments for private sector activity have not been engaged effectively enough and so the policy coherence is absolutely critical for private sector investment.
I think there is still an opportunity to pull it back. The very viability of the economy hinges on how soon we are able to engage and how invasive the interaction will be with the IMF because so far we have not been able to demonstrate that we have the wherewithal to actually achieve the targets. The determination and the attitude to demonstrate that you are actually doing something and you are achieving something are probably more important than the actual number itself, it is the direction that is important.
• Ryan Straughn chairs the Barbados Chamber of Commerce & Industry’s Trade and Economic Policy Committee and is the immediate past president of the Barbados Economic Society.
