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Government has run out of options – Arthur

Government’s fiscal policy is inflicting damage on the country and the time has arrived for the Freundel Stuart administration to implement tough measures to stem the current tide of economic decline, according to former Prime Minister Owen Arthur.

“Sometimes if you refrain from doing what you must do it inflicts more damage than doing the things that you have to do no matter how painful those things may be. That situation has been reached in Barbados,” Arthur said at an impromptu news conference Tuesday morning, breaking a lengthy silence on the state of the economy.

Arthur, who served as Prime Minister and Minister of Finance from 1994 to 2008, was particularly concerned about the downgrades by the international ratings agencies, saying the downgrades were signs that the patient was being prescribed the wrong medicine.

Back in September Standard & Poor’s downgraded the country from B to B-, following the April downgrade by Moody’s from to Caa1 from B3.

In a statement announcing the latest downgrade – the 17th overall by the two agencies since 2009 – S&P said it was concerned that the island’s fiscal adjustment programme had again fallen short of stemming another increase in an already high debt to GDP ratio.

Speaking before the start of the sitting of Parliament, Arthur said the downgrades were a wake up call, not only for Government but also for the entire country.

“The importance of the recent rating agencies’ verdict on Barbados is not that they have downgraded Barbados and that downgrade has come after many years of painful effort to change things around, it is the fact that the downgrade has come despite all of the measures; the outlook is still negative and that tells a very important story,” Arthur said.

In its review of Barbados’ economic performance between January and September 2016, the Central Bank of Barbados (CBB) lowered its forecast for the year to 1.4 per cent growth, down from 1.9 per cent projected at the start of the year and 1.6 per cent at the end of June.

In his report, the bank’s Governor Dr DeLisle Worrell said while the international business and financial services sector remained strong, information up to July indicated a 7.5 per cent decline in the number of licences granted to international business companies and a 16 per cent fall in assets held by international banks during a 12-month period ending in June 2016.

Arthur, who spoke before the release of the Central Bank report, said he was concerned about the direction the sector was travelling.

“This sector has been the major new sector since Independence that has added the greatest to Barbadian prosperity. It has been the fastest growing and encourages a lot of professionals in well paying jobs. Now this sector has been going through a lot of problems . . . . That is the big triple whammy that has hit Barbados,” the former Prime Minister said, stressing that the absence of growth and the loss of foreign exchange impacted negatively on the economy.

The Member of Parliament for St Peter also strongly criticized Government’s persistence with taxation as a means of pulling the country out of the economic mire.

“The Government has sought to make up for this significant adjustment by raising taxes. But the effort to continue to raise taxes on a shrinking economy is proving to be self-defeating. The Government has therefore run out of financial options and because of the downgrade certain people cannot lend to the Government. The financial sector is already loaned up to the Government and therefore the Government, now in absence of doing what needs to be done, the Government has resorted to the worst possible thing to do which is getting the Central Bank to print over $1.4 billion to finance Government’s activities,” stressed Arthur.

In Tuesday’s Central Bank report, Dr Worrell stated that the bank had printed $114 million between April and September to facilitate Government’s financing needs.

7 Responses to Government has run out of options – Arthur

  1. jrsmith October 26, 2016 at 6:11 am

    Well our government thinks you can have a taxed economy , this government running out of options, you only run out of options if you are trying everything possible ,but if you are doing nothing you are just a failure…

    This government seems to have been elected to destroy our country, the government is standing in the way of progress doing nothing… ,,,,,,,,,,,,,,,,,,,,,,,,,, this is a bits-sa government , bits of this ,bits of that ,try this , try that and hoping something work….

    Reply
  2. Danny Colombian Clarke
    Danny Colombian Clarke October 26, 2016 at 6:11 am

    You add new taxes and increase the ones already in place on ppl that for the most part have not had a salary increase in a long long time , including the pensioners whose annual increase to help with the rising cost of living that was stopped for the last 5+ years . (An increase is finally coming Jan 2017) and you expect to see spending ?? Projects that would bring employment take years instead of months to start because of government run around . Manufacturing has seen no positives in years .. The list goes on . How you expect to get growth . A school child and all could tell you it ain’t possible . All we continue to be told is we turn the corner by the MOF but everything speaks differently . Maybe we turn the corner to s**t street

    Reply
  3. harry turnover October 26, 2016 at 8:02 am

    “the time has arrived for the Freundel Stuart administration to implement TOUGH measures”
    Owen Arthur….TOUGH measures ???….so you mean to tell me that the methods already used weren’t TOUGH ??…lord have mercy ! what you put DEM to do to the people now?
    DEM did feel fussy when DEM heard that the IMF say the economy has turned the corner a while back,but they can’t talk about that now cause it looks as though it has become impotent there because it like it BREK….down there and can’t get back up

    Reply
  4. Alex Alleyne October 26, 2016 at 8:17 am

    Not yet , the money machine still have INK.

    Reply
  5. 3rdsun October 26, 2016 at 9:38 am

    That means no new salary increases. Those who want 23 percent increase better make do with 23 cents

    Reply
  6. David Hall October 26, 2016 at 9:47 am

    A tragic set of circumstances are descending on Barbados whilst out chief civil servant, the Prime Minster, is fiddling as emperor Nero did while Rome Burned. Arising only to talk about an upcoming Independence concert. How truly sad.

    Reply
  7. Carson C Cadogan October 26, 2016 at 10:46 pm

    My goodness he is like a stuck record.

    From 2008 he was saying that the country was at the brink of collapse.

    This is 2016 and he is still singing the same song. None of his dire predictions has come to pass, yet he persists.

    I would give up if i were him.

    Reply

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