Bad dream

Noted economist Ryan Straughn says after analyzing the latest Central Bank of Barbados economic report for 2015, he was left to conclude that “it reads like a nightmare”.

Tearing into the January 19 economic report in which Governor Dr DeLisle Worrell revealed that the island had achieved 0.5 per cent growth last year and was projected to realize 1.8 per cent growth this year, he told Barbados TODAY the report suggested that the economy was “not anywhere close to turn around”.

Straughn, who recently threw his hat into the political ring as a candidate for the Opposition Barbados Labour Party in Christ Church East Central, said while he understood the reasons for the low growth, he had expected that by now the economy would be on a trajectory to deliver some tangible results after “five or six years of what presumably has now
been austerity”.

He recalled that in May last year the Freundel Stuart administration had rejected the International Monetary Fund’s projection of 0.8 per cent growth for 2015, which was the worst among 12 Caribbean countries.

However, Straughn said the fact that Barbados has now fallen 0.3 per cent below that projection told him the island was not getting any better any time soon.

He also pointed out that last year’s 0.5 per cent growth came in spite of a 14 per cent increase in tourism, adding that if this was not enough reason for alarm, the island’s reserves position had not improved in the face of relatively low oil prices in 2015.

In a detailed analysis of the Central Bank’s report, Straughn also took serious issue with its assessment of current labour market conditions.

The Bank had stated that while there has been no perceptible increase in productivity, “labour costs are estimated to have risen by one per cent per year since 2008”.

“As a result, the large gap between unit labour cost and output per worker persists,” said the Bank.

However, Straughn, who is a former Central Bank economist, suggested that the given analysis was “quite disingenuous, if not quite blatantly untrue”.

He noted that “a myriad of things” had taken place within the labour market, including that a number of people had either been made redundant, were laid off, or put on “short week, short days, week on and week off within both the public and private sectors.

“Therefore, to suggest to Barbadians that labour costs have been rising I don’t know where the Central Bank Governor and the source for that chart would have gotten this information from, but they are certainly not labouring in the same Barbados as the rest of us and I think that statement, based on what transpired or not transpired, depending on how you look at it, I don’t think anybody can take that statement seriously,” he told Barbados TODAY.

He also pointed to the decline in construction last year, saying wages within that sector “have actually gone down”.

The former Barbados Economic Society (BES) president also expressed alarm over the Bank’s statement that a projected four per cent target, aimed at reducing the fiscal deficit to $366 million, was in reach, provided that the Government completes the planned divestment of the Barbados National Terminal Company Ltd (BNTCL).

Straughn said while it was okay to have a target, “how you get there is a different matter”, warning that “the target in of itself is not contingent on divestment”.

He also questioned where Government would get the money from to generate the revenue to meet its target for this economic quarter, given the fact that tourism was not generating a lot of activities for the rest of the economy.

“These are some of the things, that when I look at the report and you see the numbers . . . I ask myself on what basis did the Central Bank make these projections?”

The other thing that really stuck out for Straughn in the report was that $238 million in additional commercial bank reserves on deposits at the Central Bank was “recycled” to Government.

He pointed out that the commercial banks’ reserves were meant to “protect us the depositors”; therefore he said “when I see a statement like this I am alarmed as a deposit holder”.

He also expressed concern that Government’s use of funds from the Sinking Fund to finance the deficit would affect its ability to meet its debt obligations.

In fact, he warned that there could be “long-term repercussions” if Government’s expenditure component was not addressed.

“It truly concerns me,” Straughn said.

In terms of the Central Bank’s forecast that the Government’s deficit would gradually fall to around 1.5 per cent of GDP over the next five years, Straughn said that was nothing but “gas”.

He also took issue with the provisional and estimated $43.4 million GDP contribution of the electricity, gas and water sector three years in a row from 2013, saying it was  “impossible” for the sector to produce the same output in 2015 as it did in 2014 or 2013 given that there were some issues last year that affected the sector.

“I know it is an estimate but the estimate still has to be rooted in reality. So the Governor and his team have to go back to the drawing board on that,” he said.

“The reality is that the economy is not growing and like it or not, the continued monetary and fiscal policy is inconsistent with growth and has been now for the last six years. So unless the monetary and fiscal policy together in tandem are creating opportunities for growth there will be none,” he concluded.

4 Responses to Bad dream

  1. Tony Webster February 5, 2016 at 5:44 am

    Why, Oh Why, does The Law requires us , when about to give evidence in Court, mandate that one shall Put Hand on Book, and shall recite in a clear and loud voice: ” I Swear to tell The truth; The Whole Truth; and Nothing But The Truth”?
    I have no idea, at all. You?

  2. jrsmith February 5, 2016 at 7:28 am

    50 years of independence, but ????????? are we prepared, to face the 50,1st.. whether we dream or not, Our government is standing in the way of progress, they are not capable of managing Barbados LTD, this is a group way in over they heads ,the major issue, the government of Barbados is our main employer,the only way out of this mess, the stupid idea of borrowing 290 millions to build a hotel, this money should be diverted to build and refurbish our island infrustructure .

    We don’t have a private sector large enough to raise the level of employment.. the only chance we have in Barbados is a quick an sudden change of government, but, also our people need to be taught, the basic usefulness of understand our local economy and how this effects our way of life , but also the encouragement of they contribution as to business attitudes , no matter how small…

  3. Schofield Hewitt February 5, 2016 at 10:21 am

    Hi Mr Straughn, what contribution have you made whislt being a part of the central bank staff, to help Barbados recover from this slump …am not sure , so am just asking a question because you seems to be an honest guy .

  4. sam clarke February 5, 2016 at 4:04 pm

    Mr. Austin, the truth hurts.


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