Listening to the Estimates debates last week, it is absolutely clear that Barbados continues to be challenged by a number of serious issues. They must be overcome sooner rather than later if there is any chance for the country to rebuild strong confidence among consumers and investors alike so that economic recovery can begin in earnest.
With a fiscal gap of over $1 billion, an economy that has failed to record any meaningful level of economic growth over the past five years, and projected growth in 2015 of less than two per cent, it is rather difficult to imagine how the fiscal situation will ever improve anytime soon, even in the light of intensified austerity measures.
But the problems for the Barbadian economy certainly do not end with the weak fiscal situation. The Estimates debates confirm that a significant amount of difficulties exist in relation to education, health, the provision of other social services, housing, public works, and agriculture, among others.
Sadly, the solutions to many of these issues must begin with a strong fiscal position.
If the Government is unable to generate a surplus on the current account, it will continue to struggle to find the required resources to inject into the various critical areas such as education and health.
The current situation in Barbados is rather interesting – interesting because over the years this country has done so many things right on the economic front.
This country has built up a strong reputation regionally and internationally as one of the leading economies in the developing world.
And more importantly, this country has created many of the institutions that are critical in ensuring growth and development in a sustained mannner.
Yet, so much has gone wrong in relation to matters that generally tend to retard growth and development.
It is within this context that the weak fiscal situation facing the Government, relatively high rate of unemployment and the huge public debt continue to stand out.
Against this backdrop, in June last year, I offered the following as part of one of my weekly columns that addressed the issue of improving investor confidence in the Caribbean: “After all, given the changing dynamics in the global economy, does anyone believe that small Caribbean countries would be able to attract any significant level of foreign investment if they are unable to record positive economic growth rates over three to five years, eliminate or reduce the fiscal deficits on Governments’ current account, lower the rates of unemployment to below 10 per cent, and effectively manage their public debts to bring them within generally acceptable levels (for example, maintain debt to GDP ratio of 60 per cent or less)?”
But how do we get those key economic indicators to move in the required direction?
The answer is quite simple: As a small, open economy, Barbados must return to the point of getting economic fundamenals right.
That is the only vehicle that can drive domestic and external economic stability.
As the country approaches this stage, there is no doubt in this author’s mind that we will be able to surely rebuild economic confidence.
Consumers and investors will respond positively to those developments and by their actions, our economic fortunes will eventually be restored.
Email:bfrancis@uwichill.edu.bb
