WHAT MATTERS MOST: Danger in denying the obvious truth
The real danger in Barbados is that the Minister of Finance and his advisers started to believe their own propaganda about the economy. They found a solid economy with adequate foreign reserves, a manageable fiscal position, moderate unemployment and a threatening debt situation.
By every indicator, the Government has performed worse. In the case of debt, the amount has more than doubled so it does not make sense to continue blaming the last administration. The most recent attempt is to blame the method of government accounting.
Barbados is not yet using a strict accrual system of accounting. So the ongoing poor fiscal position has nothing to do with the system. It is an attempt by the Minister of Finance to bamboozle the public. This is quite easy to do since it is obvious that he is bamboozling himself. Size and structure
When the national debt was far less than what it is today, the writer was criticising the size of the debt. It took quite a while for the structure of the debt to be used as a pushback against the arguments that were being made. But the preponderance of local debt was always an advantage because it is serviced with local dollars.
In fact, the David Estwick debt proposal suffered from the conversion of local debt to foreign debt. This would have increased the need to find foreign currency to service the huge debt, no matter what the interest rate. This does not deny that the maturity structure of the local debt can be evaluated to find savings. This is a matter that needs to be studied.
It is time to accept that the below-the-line items in the government accounts, which the writer identified several years ago as worrying, are not responsible for the tremendous growth in Barbados’ national debt under the current administration.
It is hypocritical for the Minister of Finance to continue suggesting that past behaviour is totally responsible for our present fiscal sins.
The propaganda also includes persistent attempts in the recent past to deny that the Central Bank was, and still is, printing money.Bewildering
Such denial was always bewildering, since the institution has been making losses for the last seven years and was still able to buy over a billion dollars in government debt. This is a common sense matter that does not require any university training. It is simply home economics.
Tell me, where would the bank get over a billion dollars from to buy government paper? There is only one institution in any country that is allowed to use money that is not coming from a productive endeavour and that is the Central Bank. The means by which this happens is classically called the printing of money.
By the way, Mr Minister, the printing of money in Barbados cannot be compared with that of the United States, where it is called quantitative easing.
The implications for the former are particularly grave, which explains the continued decline in the foreign reserves, notwithstanding the stunted performance of the tourism sector.
Lack of appreciation
In the case of the US, even perceived “enemies” line up to buy its debt. The frivolous excursions into fiscal illusion by the Minister of Finance are suggestive of a lack of appreciation for even the basic workings of the two economies.
The fact that the minister is no longer denying that the printing of money is actually happening speaks volumes. Not too long ago, it was being denied. Now it is being justified.
This is consistent with the view that the best form of defence is attack. The problem with such a strategy in this instance is that Barbadians are paying dearly in the process.
By the way, there is no need for a third party at this time. There is need for a genuine third group called independents who are willing to call a spade a spade.
They must not see the obvious and fail to call it what it is because of past loyalties.
They must accept that the current administration has failed and put love of country above all else.
Let not the “Trump effect” seduce you into believing that it takes businessmen to run a country.
This plays into the notion that success is defined purely in terms of money. It ought to be clear that running anything calls for competence.