Arthur: Growth strategy falls short
Former Prime Minister Owen Arthur said with the more than $400 million fiscal consolidation programme likely to plunge Barbados deeper in recession, the growth plan outlined by Minister of Finance Chris Sinckler was inadequate.
The St. Peter MP said the proposed strategy was neither credible nor realisable and advised Government to come up with an alternative measures that would allow tourism to lead the island’s economic recovery.
Arthur was speaking in the House of Assembly last night near the end of debate on this year’s Financial Statement and Budgetary Proposals.
“I commend the Government for recognising that it has to deal with growth, but I do not believe that the Government’s growth strategy is of a nature that will counteract a recessionary tendency of $450 million in tax increase coming five years after stagnation,” Arthur said.
“Many of these measures that the Government is talking about (including) the Pierhead Marina (where) the money that is being sought to be raised is to do the studies. Where are you in the project cycle? You are not ready to implement the project so don’t put it as part of no growth.
“The cruise pier is at the conceptual level, incantations cannot bring what reality denies. How often have we heard this Government saying the economy is going to be kick started next quarter by Merricks, Foul Bay, Paradise, Beachlands. Pronouncements will not get the job done.
“And I want to suggest to the Government and suggest to the country that rather than these announcements like a new hospital here and there, that there are certain fundamental things that need to be done to put us on a growth path that would give us the comfort and the reassurance that things will happen in this country to counteract any recessionary tendencies that ensue from having to undertake fiscal consolidation.
The former Minister of Finance said Barbados had reached the stage “where we have to do whatever it takes to allow the tourism industry to lead”.
“The leading sector must be allowed to lead. Many of the policies that the Government has pursued have hurt the leading sector.
Whatever is necessary to allow tourism to pull us out has to be done,” he said.
All of this was important, Arthur explained, because left alone the fiscal consolidation programme alone would be economically disastrous for Barbados.
“After many years of fiscal prudence, Barbados now has an unsustainable fiscal situation that must be dealt with and at the same time Barbados now faces an economic situation that unless it is addressed by proactive measures, and unless those measures are made to harmonise with the initiative to deal with the fiscal problem, we can go the way of societies like Japan and other societies that have had a prolonged period of decay,” he warned.
“This debate is taking place at a time when our economy is once again in recession… Government has chosen to introduce a fiscal consolidation programme of over $400 million that will compress demand … and if nothing more is done the fiscal consolidation programme of itself will plunge an economy that is already in recession into further recession.
“Such further recession would … come after there had been five years of virtual stagnation, five years when … the economy has gotten smaller and smaller, enterprises are virtually bankrupt, we are saving less, we are investing less.
“So if we now have recession, you compress demand by $400 million after five years of stagnation there is the real reality and the prospect that the economy could buckle and it has happened elsewhere.”
Arthur said the economic growth Barbados needed had to be “at a pace and on a scale and of a nature that would neutralise and more than compensate for the recessionary tendencies that are not just implied but are imbedded in a $400 million contraction programme”. (SC)