Slide will not stop
Government’s initiatives in the 2013 Budget will not stop the island’s decline in foreign exchange reserves and set the island back on a growth path.
In fact, Opposition Leader Mia Mottley told the House of Assembly this afternoon that several of the initiatives were so vague with no additional information supplied that most Barbadians and especially those in the public service, were still not sure what the future holds.
All the Budget had served to do, she charged, was to marginalise the public service because they were still not sure if their jobs were secure; to leave the business community in uncertainty because the measures implemented would see them suffering from the $150 million contraction and “fees hidden in one line in a diagram” of the document.
Mottley further charged that a number of new taxes were hidden within the Budget so that Barbadians themselves were not aware what was happening. The situation was such, she said, that she could firmly compare the Government’s Budget with that delivered by the Government of Jamaica in the 1970s.
With these new measures, she said, vendors and pensioners would now experience hardships similar to what they saw in 1991, and it was all akin to sending people back into poverty because they were in danger of losing what they had worked so hard for.
Despite early claims of a stable economy in the lead up to elections, she said Barbadians were now seeing the 21st century version of wage cuts with over $200 million to be culled from the public while the wealthy remained comfortable.
“[T]hey are so obsessed with fingerprints, Sir that the Minister [of Finance] spoke, I can’t say in legalese because he is not a lawyer, but in obfuscating the situation he spoke as vaguely as he could, making sure that in this Budget … he moves to additional initiatives and nowhere between when he deals with the fiscal policy, is there any language to support these initiatives contained in Table 1 and Appendix 1 … because the fingerprints are not to be found on it…,” she said.
She said into April and May the public was hearing comments about “bitter medicine” coming and such was the climate in the country that the private sector was complaining about receiving mixed messages and declaring that the environment was such that could discourage investors.
Late June, the Opposition Leader said, was the first time Barbados had heard about the “$400 million problem” and that the medium term fiscal policy was no longer on track and needed to be corrected within eight months. Then, said Mottley, the public was further panicked by the Prime Minister’s mention that they would not devalue the Bajan dollar, noting that before this there had been no mention of devaluation which was thereafter firmly entrenched in people’s minds, thereby ligitimising concerns.
In all of this, she charged that the minister of finance had yet to say how he would stop the decline in reserves.
“We are therefore not surprised that there is a $300 million drop in reserves. We are disheartened but not surprised, because the very Government behaviour has contributed more to that lack of confidence than anything else. But you know what is the sad thing, Sir? It is that the Minister of Finance in his three hours really did nothing to tell us how he would stop the immediate decline of those reserves and his references to growth and to the measures all relate … to initiatives that are either to take place a year hence, next year, nine months hence, or the ones that are to take place next month require so many steps to execute them that they are unlikely to be achieved within the time frame to stem the problems in relation to the reserves.”
The second problem, she identified, was in relation to the financing of the deficit, querying if Government could afford to pay its monthly bills and if the measures would be instituted in time to facilitate this.
“The bald truth is this, there is no economic solution to the loss of confidence and if the Minister of Finance understood that he would have thought twice before he delivered those remarks in this chamber… The Member for St. Peter will speak first hand of his experiences in Jamaica watching on … and he would have seen that when the loss of confidence came there was a flight of capital, there was a failure to want to invest, but here reported it could not be resolved by any economic solution and the only solution ultimately is a political solution — a change of Government.”
The increases in VAT and excise tax, she further charged were insufficient to make the kind of changes needed and furthermore, the Government’s capital programme was even smaller than that of the Tom Adams administration of the 1980s.
Tourism, manufacturing, agriculture, construction were all sectors showing no economic growth, said Mottley, and furthermore several of the projects the private sector had been hearing would be restarting since last year were still stalled.
“What you have is a series of initiatives designed for something else and that something else is the IDB, but it is not designed to stop the immediate decline.” (LB)