Private sector issues strong appeal following Central Bank report
With the Government’s fiscal adjustment programme currently falling behind by $174 million, the Barbados Private Sector Association (BPSA) today issued a strong word of caution to Government that its recent tough measures had already licked the “wind out of the sails” of the business community.
And in a veiled appeal to Government to loosen the tax noose, BPSA chairman Alex McDonald further cautioned that the only path to private sector-led growth was through “the freeing up of taxation”.
He also said the time had come for “relevant, deep, continuous and meaningful communication at the level of the Social Partnership and beyond”. This, he stressed, was urgently needed to jumpstart the process of restoring confidence in the island.
“What we know is that from whatever angle you look at it, Barbados is in an extremely difficult position,” McDonald said.
“Years of negative or flat growth, negative investment grades, and a series of tough fiscal measures have taken the wind out of the sails of our confidence as a people,” he told reporters, adding that “this sagging confidence has resulted in an atmosphere of gloominess and uncertainty, both in the private sector businesses and the population at large”.
Referring specifically to yesterday’s Central Bank report in which the Governor warned that greater fiscal adjustment was now necessary in order to achieve the deficit target of 6.6 per cent of GDP, McDonald said the report had failed to provide the necessary encouragement that the island was on a path to economic recovery.
He said there were simply too many questions that were still unanswered and too much speculation.
“While there may be some green shoots appearing in the Central Bank’s report it did not disclose them properly,” McDonald said, adding that “the trend we have seen recently of the media not being allowed to interrogate [the Governor on] the issues, has not allowed for clarity and transparency.
However, he stressed that “in times like this, the Barbadian private sector deserves absolute clarity as to what the proposition is”.
“We need clarity. For instance, what measures are being contemplated to cover the $174 million shortfall in revenues? What about the 0.1 per cent tourism value added number in light of higher arrivals? Is this number satisfactory and what can we be doing better?
“What is contributing to international reserves, as we have seen a spike in March 2014, that is atypical of this period? What is driving our foreign direct inflows to $399 million and what can we do to sustain this? What is driving the increase in net public sector debt up from 67 per cent last year to 75 per cent now?” he added.
McDonald also wants to know how the Government plans to raise the needed $174 million to close the deficit [to 6.6 per cent of GDP], when it struggled in the first nine months of its fiscal adjustment programme.
“I think if you are planning your new year, as many businesses are doing now, there is still a big question mark as to whether there will be further taxation, will there be further retrenchment, is there something that we are not seeing?
“That has caused us some question marks. I would imagine clarity from the Governor and the Ministry of Finance would assist in that,” the BPSA leader said.
He noted that in the past the private sector had operated in an environment of suppressed demand, high taxation and increasing pressure on cash reserves to merely keep afloat. He said what would lead the growth in the private sector is “the freeing up of taxation”.
While stating that the BPSA was not about attacking anyone, he said the association was challenged to “support institutions that seemed reluctant to engage on a meaningful level with us”.
“On that basis we call for the members of our civil, governmental, labour and NGO society to begin the process of providing clarity and transparency into the story behind what’s going on in our fair land. The current asymmetrical retaining of information and data cannot be sustainable,” McDonald said.
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