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BEHIND THE HEADLINES: Mottley’s finance plan

Tony Best

BEHIND THE HEADLINES: Mottley’s finance plan

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No stranger to a national debate on economic matters, Mia Mottley, Barbados’ Opposition Leader, is perhaps one of Parliament’s most recognisable voices on the nation’s finances.

Whether it is analysing the Central Bank’s controversial policy on the printing of money; zeroing in on the financing of state enterprises; grappling with the Government’s high deficit; or peering behind the sensible warnings contained in the Auditor General’s report, Mottley, a former Minister of Economic Development during part of the first decade of the 21st century, speaks regularly and with relative ease and clarity on her country’s ailing economy and how to engineer a sound turnaround.

So, it didn’t come as a surprise when she said the other day in New York that if she succeeds in leading the Barbados Labour Party to victory in the next general election she would seriously consider becoming her own Minister of Finance. In short, she would be both Prime Minister and Finance Minister, a combination that dates back to Errol Barrow, Tom Adams, Bernard St. John, Sir Lloyd Sandiford and Owen Arthur.

“That’s something of a tradition in Barbados to have the same person as Prime Minister and Minister of Finance,” Mottley told BARBADOS BUSINESS AUTHORITY. “How we would structure it would be a matter of consideration. There are many different options for me to look at. But the most important thing is to show Barbadians they have an alternative Government and an alternative way, which can bring back stability and transformation. It’s a matter to which I am continuing to give serious thought and I am not prepared to make a definitive statement on it at this stage. But I will admit of all possibilities that there is a very strong case for ensuring that you don’t divide responsibility and authority. To give a minister of finance responsibility without having authority for meaningful change is part of the reason why we are in this [financial] problem today.”

As she sees it, despite the International Monetary Fund’s (IMF) projection that the economy would grow this year by as much as two per cent, it remains in “deep, deep crisis” and she blamed Government policies and the Freundel Stuart administration’s failure to take corrective action.

“It’s in deep crisis because the Government’s fiscal situation, its continuing high deficits, its debt-to-gross domestic product ratio is big and by the inability of our productive sectors to fire [on all cylinders] as they should, all of these things are at risk,” said Mottley during a four-day visit to New York where she attended a number of public functions, including a launch of the Mighty Gabby’s biography, Who Gabby Think He Is?

“When you add to that picture, the fact that there are extraordinarily high levels of printing of money by the Central Bank” makes the situation worse,” she added. “Were it not for the Central Bank and the National Insurance Scheme taking up Government paper, the Government would have imploded a long time.”

She was quick to add a third source of financing to the equation, the building up of arrears in the local private sector.

That explains why, Mottley insisted, local firms were under considerable strain at a time when they were running into difficulty getting financing from commercial banks, a situation which had put corporations “at serious risk of survival”.

She pointed to the NIS huge exposure to Government indebtedness through the scheme’s $3.2 billion holdings of Government paper in 2015, up from $1.4 billion in 2007. She tacked on more than $200 million owed to the NIS for “all kinds of things from contributions and rental of properties to the return of the subsidies for the non-contributory pensions that NIS pays on behalf of the Ministry of Finance.”

Like Owen Arthur, a former Prime Minister and Minister of Finance, the Opposition Leader complained about the Central Bank’s continued “printing of money” which she estimated had added almost $1.2 billion in Government paper to the country’s financial obligations, up from $20 million in 2007-2008.

“Despite the fact that international and regional financial institutions, the Opposition, independent analysts and even a member of the Government had spoken out about it, the printing continues unabated,” Mottley insisted.

There was more. She pointedly referred to the 2015 Auditor General’s report which listed $1.4 billion in liabilities accumulated by statutory corporations to underscore the depth of the fiscal nightmare.

That was why the IMF’s projection that the economy would grow by about or two per cent this year wasn’t anything to write home about.

After all, she asserted, the projected expansion was “negligible in comparison” with the overall economic decline in the past eight years.

“To the extent that there is a glimmer of light we hope that’s the case but we are yet to see it on a sustained basis,” Mottley insisted. “Many of the projects to which the Government continues to refer are not yet ready.”

She was quick to warn taken together the approach amounted to a pattern of “reckless” behaviour that could imperil Barbados’ monetary stability.

An articulate debater in and out of Parliament, Mottley speaks of the Stuart administration’s “fiscal gymnastics” employed in its efforts to paint an increasingly glowing economic picture, including declining fiscal deficits between 2011 and 2012. And she targeted the use of NIS resources to bridge the fiscal gap when it came to accounting for transfers and subsidies of statutory corporations.

That brought us back to the relationship between the Prime Minister’s Office and the Ministry of Finance.

“At this stage, it is clear the Ministry of Finance and the leadership of the country have to be inextricably linked in order to give the Minister of Finance, not just the responsibility but the authority to bring about the changes in the country,” she said.  “It is something I will continue to sleep on because we are going to need all hands on deck.”

Should voters give Mottley and the BLP the chance to form the next Government, it would be interesting to see how she fashions a Cabinet of ministers that would take the nation forward.