A political Budget
The House of Assembly debate on the 2016 Financial Statement and Budgetary Proposals is over. However, the implications arising from Minister of Finance Chris Sinckler’s pronouncements will continue to generate discussion across Barbados for several reasons.
Emergent from the Budget — and perhaps achieving consensus — is that Barbados’ troubled economic situation will continue into the foreseeable future, more arguably, with no end in sight. In addition, more Barbadians, although willing to sacrifice in the national interest, will realistically see themselves as being pushed further and further away from the meat of economic empowerment and social enfranchisement.
From a development perspective, people-oriented progress will continue to lag behind the political rhetoric which will become more sharpened as the promises of multi-million projects fade in the dust of turned soil. The implementation of poorly thought-out policies and projects that are born in secrecy, have failed to reduce the incidence of poverty in Barbados.
Many have already concluded that the nation remains at the doorstep of the International Monetary Fund (IMF), or devaluation. In fairness though, it looks as though the Finance Minister clearly had his attention on ‘fiscal constraint, foreign reserves management, and debt consolidation’ so as not to ruffle the multilaterals which are eagerly scrutinizing what occurs in Barbados.
Barbadians should recall that it was the IMF which stated the following in its May 2016 Article IV Consultation Report: “The economy faces serious challenges. … Barbados remains highly vulnerable and may not realize its potential without deep-seated reforms to align revenues and expenditures, and reduce debt.”
Still perplexing is that after having had a dozen or so credit rating downgrades between 2009 and 2015, and having made several adjustments to its recovery programme inclusive of increasing taxes year after year, the fiscal situation has not improved for Barbados.
This 2016 Budget has made it less easy for the Prime Minister, the Governor of the Central Bank, and the Finance Minister to dismiss Standard & Poor’s and Moody’s. The Government’s commitment to fiscal consolidation, although urgently demanded, has been sluggish at best.
Barbados’ still-high fiscal deficit and rising debt burden without having achieved any significant economic growth for almost a decade, seem too slithered aside from any frontal assault to be conducted by the Finance Minister.
While it was unnecessary for Prime Minister Stuart to remind Barbadians that “every Minister of Finance has to have regard to the exchange rate policy tool that he has at his disposal,” it was instructive that Dr David Estwick was able to voice his concerns over the Government’s slowness to make the transition and implementations necessary for a real turn around in the Barbados economy.
Estwick was adamant that Barbados should “move at a faster rate towards refinancing and debt restructuring because … the magnitude of the deficit and sustainability in regards to debt services cannot effectively be executed.” Of course, when one adds the importance of attracting local and international investments, then it is easy to understand the significance of certainty and confidence as aimed at hallmarks for the Government.
It is therefore unfortunate that Minister Sinckler and the Prime Minister could speak with verbose frivolity on the shortcomings of the local private sector but have not seen it fit to be explicit on the sector’s growth and expansion. Without explicitly stating anything on domestic capital formation which, in economic literature, is seen to be a “sequential and cumulative process that flourishes in an environment of macro-economic and political stability,” the Finance Minister left the impression that Barbados’ private sector is so fundamentally flawed, that achieving efficiency through privatization or divestments would become a national absurdity.
At a more personal level, the cost of living in Barbados will rise due to the National Social Responsibility Levy – another tax by name and frame and intent. This tax may be of value but it comes at a time when taxpayers have carried more than their fair share of the national burden. This tax on imports is being put on the backs of Barbadians trying their best to stand straight when in our midst there are discourses of a crooked line emerging which tend to always portray one or two powerful interests and a few familiar governmental faces.
Regardless of the facts, the perception becomes the reality, especially when bad situations are being repeated time and time again. There are certain elements in the private sector that get to benefit disproportionately from those struggling in the wider society. The gap between the wealthy and the poor (with ethnocentric overtones) becomes wider as more middle-income Barbadians fall to the bottom of the socio-economic ladder.
The 2016 Budgetary proposals, although attractive in some quarters, will produce a divided and inegalitarian society. The fallout will be compounded by a growing informal sector in which the ‘black market’ will throw up its own can of worms.
The concerns being raised in this article are grave without being alarmist. Minister Sinckler quite interestingly and correctly stated that through the Budgetary proposals, the Government holds the responsibility “to develop policies and craft strategies, both economic and social, to assist with the orderly, holistic and expansive development” of Barbados. The minister, however, has suffered a decline in his credibility which needs to be repaired.
As a final concern, the Budget contained no new provisions for job creation. Maybe someone will point to the minister’s gift to public servants. These workers have not received a pay raise in nearly 10 years but have been paying a whole set of new taxes, while many remained temporary in spite of the legislation in place for their appointments.
Based on this Budget, this writer remains unconvinced that “the collective good and … overall best interest of the country” are central concerns of this Democratic Labour Party government.
(Dr George C. Brathwaite is a researcher and political consultant and up until recently, editor of Caribbean Times (Antigua).