EDITORIAL: Govt must act now to save the economy
THERE WAS a time when Barbados was seen amongst Caribbean nations as the economic model to follow. The country had gained a reputation for strong fiscal management and prudent economic leadership.
Today the story is different. The country is submerged in debt and the economic outlook is precarious. It can no longer pride itself on having the region’s most buoyant economy. The situation is unsettling because despite the warnings of greater danger ahead, we appear tardy in taking corrective actions.
A number of leading independent economists, both local and regional, have pinpointed fundamental problems. These apolitical voices seem to be in unison in their messages. They all appeal to the Freundel Stuart administration to take urgent and decisive action on the fiscal situation and ensure austerity measures work.
The outlook has left not just business people nervous and unsettled, but the professional class, salaried employees, housewives and retirees. The public wants answers and assurances the country is not going the road which Jamaica and Guyana have gone and Trinidad struggles to avoid.
It is evident at this juncture that given Government’s limited financing options, it will almost certainly have to seek multilateral assistance within the next two years.
Many businesses looking to invest domestically will find it increasingly harder to get attractive returns on such investments. Some will resort to taking and keeping much needed foreign exchange out of the island while others will look for offshore opportunities in which to invest. The recent ratings downgrade will also make it more difficult for corporations which must themselves retain a good rating to do business, especially when dealing with international investors.
This is an environment which creates a vicious cycle that if not effectively managed, can spell ruin for the national economy. The risks have simply got greater and people fear the country is being consigned to the economic dustbin.
Minister of Finance Christopher Sinckler needs to see this situation as a crisis and should solicit the help of the local experts available to ensure Barbados’ best interests are properly served. He must appreciate that the country cannot continue to carry its debt burden, neither should he ignore the warnings of the dangers of over-reliance on financing from both the Central Bank of Barbados and the National Insurance Scheme.
He must not shirk the necessary decisions such as cutting loose burdensome, non-performing state corporations while promoting policies which can bring in foreign exchange. Some tough decisions must be taken sooner rather than later and it is something that all citizens need to recognise, including business and trade union leaders.
Barbados is on the edge of a financial precipice. The message is unambiguous; we need to take the correct action. On the eve of celebrating 50 years of political independence, this is not the kind of financial position the country wants to be in.