A lollipops Budget
What was the rationale for having the Budget Debate in the middle of the Olympic Games?
Barbadians were starting to use the events around the Crop Over Festival which dovetailed into the start of the Olympic Games to take mental respite from all the goings on in the country.
Mothers (and some fathers as well) are doing their best to finance back to school supplies under hard economic restraints. The Olympics and its ‘feel good’ factor was starting to ease the tension in Barbados.
Groups of friends, neighbours and family were meeting at designated spots to watch segments of the Games together. There was collective national support over last weekend as the country watched Akela Jones make her bid in the women’s heptathlon event.
Although she did not reach a podium position, our pride still soared at her effort. Akela’s personal story and the maturity and dedication she carries to her career are appreciated by every Barbadian and we were basking in her achievement.
Our beloved regional son, Usain Bolt, topped off the exhilaration Akela set in motion by securing the record of being the first man to ever win three consecutive 100 metres Olympic races. We were also caught up with the hair wars of the American gymnasts and the usual debates about black beauty and black tidiness.
Then the Budget came. The presentation started with the usual disclaimer we have been force-fed since 2010. There is a worldwide recession. Things are so uncertain and Barbados’ position is not that different from that of many other countries in the world.
This rhetoric is now so far off-centre of any reality that it was amazing to hear so much time invested in trying to make it saleable. The economic crisis of 2007 started in the American real estate sector and quickly travelled to other sectors within the American economy including the insurance sector and the automobile industry.
Due to the cross fertilization between America’s economy and several other international business sectors, the recession which was triggered in America soon travelled to other countries with Germany, Japan and China all being affected.
The first term of the Obama presidency was largely concerned with providing bail-outs and other facilities to stop the collapse of the American economy and to particularly address the two major fallouts – job and home losses. By 2009, America was officially out of recession although some Americans were not yet feeling the growth.
2012 was the year where recorded growth was translated to the pockets and realities of Americans. The Japanese and Chinese economies were both firing again by 2009 with the uptakes being sustained over the next few years.
Closer to home, the countries of the Caribbean generally went into recession, following the American crisis and then came out. Trinidad’s economy has been an exception having withstood the earlier trends but slipping into recession by 2015 due to sustained low prices for oil and petroleum.
As early as 2009, Haiti was recording 0.5 per cent growth while the countries of the Organization of Eastern Caribbean States (OECS), whose economies closely mirror Barbados’, have recorded growth between 0.5 and one per cent for the period we have been discussing.
I have put all these facts here to suggest that any Budgetary proposal for Barbados’ economy which starts with a contextualization of what is going on by using the 2007 economic crisis, is going to simply end wrong because it has started wrong.
While the Minister of Finance went far into history to dig back up the crisis in subprime real estate, he mentioned nothing about the most serious development which will affect Barbados’ immediate economic fortunes – the Brexit vote and its impact on Barbados. Apart from the obvious fallout which we have to brace for in the tourism sector, we must also consider the implications for remittances and the returning nationals, whom we had started to lure as a component of the strategy for raising foreign exchange.
Under the current government, returning nationals were given a number of concessions to encourage them to return home and resettle. Now that many of them have pensions which have reduced due to the slump in the pound sterling, I was surprised to hear that the Minister of Finance did not address this sector, especially since the Minister stated his primary objective for the Budget presentation was to improve Barbados’ foreign reserve position.
The rhetoric and measures of the 2016 Budget do not co-exist seamlessly. Although the rhetoric around the Budget was about austerity and the serious structural challenges our economy still has, election lollipops were the measure of the presentation. Appointments in the civil service, bigger pensions, and projects for debushing and national clean-ups are exactly the things which Caribbean electorates have become accustomed to in the months leading up to a constitutionally due election. Indeed, the fact that more was not offered in the Budget should be the clearest indication that Barbados’ economy is struggling and poorly off.
We are flirting with dangerously low foreign reserves. Several Government departments are barely functioning due to cash flow issues. The Minister of Finance has responded to this by staying true to his partisan political agenda. He has thrown a wet blanket on top of the other wet blankets which have been placed over the Barbadian economy.
It is hard to conceive that any kind of fire will be kindled under these blankets. Therefore, it should not surprise anyone that we will come out of next year with anemic growth, if any growth at all. Meanwhile, the debt to GDP ratio is still out of control and confidence has not been restored in the economy.
I am not in the habit of getting bogged down in economic terms because these do not translate into anything that regular people in the street understand. If asked for a broad explanation of the Budget takeaways, I would simply say the following.
Food is going up and clothes are going up. Building materials are going up as well as plates cups and forks. While everything is going up, granny will get an extra $20 a month and with the money which you will not have, you can find a nice pair of earrings to buy duty free.
Did I miss anything?
(Marsha Hinds-Layne is a full-time mummy and part-time lecturer in communications at the University of the West Indies. Email: email@example.com)