An Election Budget?
As Budget Day is next Tuesday, it is fitting that I do a pre-Budget state of play. Bearing in mind that nothing much has changed in a positive fashion in the last three weeks, my thoughts are basically unchanged from the article I wrote on economic incompetence a few weeks ago.
As a practising economist, there is a rather simple assumption we tend to make that is fundamental to the analysis of economics data. It is that past behaviour is a fairly good predictor of future behaviour. Of course, there are times when some significant shift in behaviour may come about. We refer to this as a structural change but, thereafter, a new pattern may develop on which future behaviour can be modelled.
Typically, around this time, people usually ask me what is likely to come in the Budget with much anxiety. In keeping with that basic assumption, there are a few things that have struck me since 2010 which might not be lost on you but I will focus on two main elements.
I think it is safe to say that Barbadians have a pretty good idea of all the taxation measures introduced by Delisle Worrell, Freundel Stuart and Chris Sinckler over the past six years. Whilst I don’t have any inside knowledge with respect to the thought process of this economic triumvirate, if I were a betting person, I’d put a tenner of more taxation.
However, with general elections due sometime within the next 12 months or so, I might lose that particular bet. So perhaps, the best is to assume that the Democratic Labour Party will use its incumbent position to seek to win the next general election. Hence, it wouldn’t surprise me if some announcement of tax cuts are offered. This would represent that structural shift in policy to which I referred earlier but its motivation may ease the tax anxiety among Barbadians over the short term.
I took the opportunity over the last couple days to review the Barbados Growth and Development Strategy (BGDS) 2013-2020 (http://www.economicaffairs.gov.bb/download.php?id=327), which was presented to Barbados at a National Consultation in June 2013 by the economic triumvirate. I compared the projections for the fiscal deficit as a percentage of GDP in this document with that of the June 2016 report.
Source: Ministry of Finance & Economic Affairs, Central Bank of Barbados
From the table above, if one ignores the revision for fiscal year 2012/2013, it is clear that having endured 31 months of the Home Grown Fiscal Stabilization and Economic Revitalization Programme offered by the economic triumvirate, Barbadians are right back where we started.
In short, the current administration has missed all the targets it set itself as critical to returning the Barbadian economy to a sustainable growth path. Yet the members of the Democratic Labour Party continue to cite success. This is made worse by the fact that public services like garbage collection, water supply, access to drugs and health care, just to name a few, have deteriorated significantly.
So when I’m asked to assess the likely budgetary proposals and more importantly, the likelihood of success, I cannot help but resort to the basic assumption we economists make. In my very humble view, I expect the members of the Government to continue touting the success of its economic policies. I also expect them to blame the Barbados Labour Party for not reaching the targets that the Democratic Labour Party set themselves and continue to miss horribly.
It also wouldn’t surprise me one iota if the Minister of Finance were to blame Brexit, ISIS, the Olympics, cricket…pretty much anything that would make their supporters feel as if the job the DLP Cabinet has done is deserving of their support.
Once presented with compelling evidence, I am man enough to admit that I’m wrong. I would be very interested to hear how the Minister of Finance explains the table above. It is something that might merit some popcorn and soda because it would be priceless.
However, rather than face reality, I anticipate to hear glowing reports of the work ministers have done in their respective ministries despite the fact that all hell seems to be breaking loose in every sector of the economy and every segment of the society. This is not the description one takes pride in painting in our 50th year celebrating Independence but, unfortunately, our investment in education does not permit me to lie to myself or to you, the reader.
Tuesday’s exercise will be yet another futile attempt by the Democratic Labour Party to steady the ship of state. Barbados is listing badly and, at best, the captain is in his stateroom snoring or, at worst, he has already boarded a lifeboat whilst the rest of us await word from the crew as to how we are to get back on track.
It is likely to be the last Budget statement before the next elections and, as such, will do nothing to improve the lives of ordinary Barbadians.
Ryan Straughn, the endorsed Barbados Labour Party (BLP) candidate for Christ Church East Central, is a University of the West Indies, Cave Hill and Central Bank of Barbados trained economist. Email:firstname.lastname@example.org