Awful, but it works
The economic medicine the Freundel Stuart Administration has been giving the country is exactly what the doctor ordered and it should stay the course with the prescription. Central Bank of Barbados Governor Dr. DeLisle Worrell assured Barbadians today that the country was nowhere near to falling into the clutches of the International Monetary Fund, but also cautioned that Government would be acting “hopelessly naive” if it moved to spur quick economic growth instead of the “marathon” that was more desirable.
He also told Barbadian business leaders that “the quality of life in our country is more important than the growth rate”, while also informing them that the island had all of the ingredients to reach the sustained growth it needed.
The respected economist also gave the thumbs up to Government’s new $600 million stimulus package on the basis that it not only had the potential to earn foreign exchange, but also attract foreign investment. Worrell share these views this afternoon while speaking on the topic “Growing The Economy”, at a Barbados Chamber of Commerce and Industry luncheon at Hilton Barbados.
“Sustainable growth is a marathon, not a sprint. If you rush out of the starting gate, boosting domestic consumption, you will run out of foreign exchange, with the risk of losing the gains you have made in the short run. In a race with experienced marathoners, only the hopelessly naive will rush to the front of the field,” he said.
“For Barbados, the proper comparison is not with the growth of countries like Guyana and the Dominican Republic whose GDP is less than a third of our own, but with The Bahamas and Bermuda where GDP is much higher. If you compare Barbados’ performance since the 2008 crisis with that of The Bahamas and Bermuda, we see no great difference.
“We in Barbados can be reassured that we are in no danger of having to accede to the impositions of the IMF or any other agency, because we have $1.4 billion in foreign exchange reserves at the Central Bank. I believe every Barbadian would agree that that reassurance is worth the fiscal sacrifices that we have imposed on ourselves, even though this means that Government continues to observe strict limits on domestically financed growth,” he added.
Worrell also pointed out that while some people were worried that the Barbados economy was not growing, he was satisfied with the fact that unlike some countries in this part of the world that had attained growth the quality of life here was still good.
“The quality of life in our country is more important than the growth rate. Our Caribbean and Latin American neighbours who are growing have a long way to go before achieving our standard of living. We do not have their backlog of destitution and want. We may therefore take our time to establish sound foundations for growth that will endure, and that we may sustain, whatever the future state of the world,” he said.
The governor said, however, that Central Banks officials “have every reason to be confident of the economic future of our country, because our fate is entirely up to us”.
“The adverse impact of the prolonged global recession is a reality we cannot escape, and because we depend so heavily on foreign exchange we do not have the option of bettering our lives by depending on our own resources. We must therefore seek ways of increasing foreign earnings from the activities we are renowned for, tourism, international business and rum, and of economising on oil imports by generating green energy,” he noted.
“We know what this entails: increasing government efficiency, developing more appropriate financial strategies, and transforming work attitudes. Government and the private sector must invest in creating new high quality productive capacity, improving productivity, and maintaining and upgrading infrastructure.
“It is a tall order, but we are in the big leagues now, and we need to benchmark our performance on the gold standard, in order to keep moving up the ranks. We may be confident in our ability to meet the challenge, when we reflect on how far the country has come in the lifetimes of many of us, on the basis of slow, sustained and equitable growth,” he added.
Worrell also restated his view that “stimulus in our kind of economy has to be limited to the things that are financed by foreign exchange and the things that will grow foreign exchange”.
“So so long as the stimulus addresses those two things, so long as it is about investment in tourism, and in international business, alternative energy, and so long as it has a major element of foreign finance then it is … desirable… If there is no foreign exchange we are in trouble.” (SC)