Economy under microscope
by Sharon Austin
Barbados’ economy will come under the microscope soon, when Government joins with key stakeholders to examine the various challenges affecting it and come up with practical solutions to bring it back on track.
The National Consultation on the Economy will be held on Thursday, June 27, at Hilton Barbados, beginning at 8:30 a.m. Participants will include government officials, the private sector, trade unionists, small business people and civil society.
Minister of Finance and Economic Affairs, Christopher Sinckler, has underscored the importance of the discussions, which will include a presentation on the economy by the Central Bank.
“When you have such challenges in your economy and you are proposing to make comprehensive interventions, most of which will affect the interests of people’s lives, either positively or in some instances negatively, you have to be able to ensure that you go through this properly and with an appropriate structure.
“We have to ensure there is the widest possible consultation, and that there is buy-in from the key stakeholders because Government can come up with any policy, but without their support, it will not succeed,” he said.
Sinckler stressed that the dialogue must be national, since there is no title deed on knowledge and everyone has a view of what should be done.
“And, in many ways, some of the views converge and in a lot of ways they don’t… So, we are trying to ensure that what is implemented will be reasonable and balanced, and we have the buy-in of the widest cross section of the public as possible. That is why a consultation like this, at this particular time, is important. But, the consultation is not the only thing being done. There are other things being done in preparation for when we introduce the final package to the public,” he said.
For those pessimists who believe the upcoming discussions will be a “talk shop” and there will be no action going forward, the minister gave the assurance that this will not be the case. He disclosed that during the first part of the session participants would be given an opportunity to express their opinions, and then they would later make recommendations sector by sector on how to transform the economy.
“So, we will say to the groups that are coming, come prepared. You have had a lot to say, now is your opportunity to put specific proposals on the table. But, we are not going to end here, because when this consultation is finished, we will then break out into groups in the coming days and weeks. We are going to invite and re-invite, because we met with some of them already, those critical groups that would have participated in the consultation to come back with even more specific proposals that Government can utilise to help us deal with this very challenging period.
“So, this just sets the platform for an even more intense one-on-one set of sessions that will take place with a number of these groups and with people who may not have even attended the consultations themselves,” he stated.
The challenges in Barbados’ economy have been prolonged because of the global difficulties which have impacted many countries around the world, including the Caribbean, which has several tourism-based economies. As a result, local authorities have had to refashion a new medium-term growth strategy, which will include a component for fiscal consolidation. And, according to Sinckler, the staff at his Ministry is currently working on that module, as well as other areas to assist in boosting the economy.
He noted that the international authorities, including the International Monetary Fund, had recently reported that growth in 2013 was likely to be much lower than they had anticipated.
“We know what is happening in places like England, where we get most of our tourists; the US, which continues to have a very up and down performance; much of Europe is in recession, including even Germany now; and we are aware that this is likely to continue into 2014 and beyond, unless something dramatic happens.
“In this context, therefore, it is normal to expect from an historical analysis and current futuristic analysis that Barbados is going to be impacted negatively. So, we have to take an almost fresh look at what is going to be required to sustain Barbados in the next couple [of] years, to keep the economy stable, to protect our foreign reserves, and, of course, to grow our economy going forward,” he surmised.
He reiterated that Government was uncomfortable with the island’s fiscal deficit and was, therefore, looking to address it. According to him, this island’s major foreign exchange earning sectors – tourism and international business – were not performing at peak.
“We know tourism has been under performing. We have a fair sense of why, and the question is, what do you do to turn it around? One of the reasons why we are not competitive in the market is because Barbados did not pay attention to our tourism product and service over the years. We did well when there was a boom and now that there is a crunch… Barbados is beginning to be shown up as being short,” he opined.
The minister stressed that while Barbados might not have been competitive with some Caribbean countries in terms of price, that was neutralised because of the top quality service and product it offered. He expressed regret, though, that those areas had suffered during the last 10 to 15 years and said that situation must change, and the hotel properties must be brought up to a higher level.
“Our three-star hotels need to be four, our fours need to be fives and our fives need to go into the diamond category. This is how we will be able to demand higher prices and be able to say, even though Barbados is slightly above price…, we are giving top quality product and top quality service,” he explained.
In the area of international business, Sinckler indicated that business facilitation must be examined.
“We have to look at our tax structures. We made some changes in last year’s budget in an effort to remain competitive, but it is not only just about lowering taxes, it is about the quality of service that people get and what products you have available. These are the things that we have to look at,” he stated.
He added that agriculture must also be reviewed to see what is required to bring it back to a level that would help the country regain foreign exchange, rather than use it on imported food items.
So, with less than two weeks to go before the consultation comes off, those major players who will be involved in these intense discussions should be arming themselves with suggestions to help bring our country’s economy back on the growth trajectory.