COLUMN – Navigating rough seas

keeping acctAs we looked around our country in recent months, it was probably difficult for many not to simply ask: “What is happening in Barbados?”

Indeed it is a question that has been asked by those looking on from outside; and it is not asked in the context of casting blame or being political.

There is no doubt that there is a simmering of frustrations and, in some cases, desperation for many individuals and businesses alike; and it appears that, naturally, all eyes are turned to focus on the Government and what it is or isn’t doing –– whether right or wrong. In my opinion, one thing is for sure: while Barbados continues to have potential on several fronts, in many regards we seem to be swimming against the tide at present.

It actually saddens me to see the prevailing mood among many persons, and this sadness is further deepened by the fact that many seem to feel powerless to do or say anything about what they see, feel or are directly experiencing.

What is our course? I have used this space repeatedly to make the call for three simple things at a national level:

1. A cohesive national development plan;

2. Use of wider population/ society to execute said plan;

3. Reflection and reconsideration of what made us who we are.

My reason for this has been that Barbados cannot return to or achieve a level of productivity, innovation and better governance if John Public remains marginalized on the sidelines, save every five years when politicians come a calling for an “X”. In recent months we have seen:

Protests and agitation surrounding our waste management;

A Budget that extracts more taxes and eliminates past benefits primarily from the middle class;

Increasing industrial unrest;

Mixed messages from the Government.

National Development Plan. At my first suggestion that such a plan was needed, many resisted my submission, saying there was already a plan. However, nobody could articulate what it said, its meaning and relevance, and so forth. I believe that a National Development Plan should and must do a few things for any nation (especially a developing nation like ours):

1. Provide clear guidance as to where our country is going and its objective for overall development of its economy, productive sectors, service sectors, its people and wider society;

2. Identify the key sectors that will take us to our stated goals and objectives; for example, tourism, international business, ICT;

3. Indicate how each sector and each service must essentially work in tandem to pave the way for our success; that is, health and education, along with ICT and financial services and so forth.

4. Provide a road map for the involvement of all citizens in their public, employment and private lives to take our country forward, as a national plan cannot depend on Government only;

5. Provide a monitoring and assessment tool of our progress and performance.

Using our citizens to advance our cause. The overall aim of national development should be the make the country and by natural progression its citizens self-sustaining and less dependent on outside forces for survival. In the context of Barbados, however, size, resources and other factors inherently restrict the degree of independence from the outside world that we can achieve; but there is room for improvement nonetheless.

It is critical though that we use the skills, talents and ideas of our men, women and children to assist in achieving the goals of our national plan. It is a reality that many of the solutions to our effective waste management,

Can we ignore our history? The recent economic review by the Central Bank of Barbados highlighted the harsh reality that the fall in agricultural output continues, and indicated that sugar production had dropped by 33 per cent, and now accounted for an estimated 0.6 per cent of GDP, with over agricultural outputs being four per cent of GDP.

My concern here is that agriculture and manufacturing were at the forefront of our development and tourism later joined them as the industry to catapult our economy and aid our development.

While I understand development, somewhere along the line we ignored production and decided to be driven more by the consumption of services, which, while potentially more lucrative, is not as sustainable and resistant to global and local shocks as a developing country would need to protect itself. I am suggesting, therefore, that some of our economic woes have to be tied to our inability to keep agricultural and manufacturing production in the forefront to serve local consumption, support our tourism industry and save foreign exchange where possible.

In hindsight, we clearly lacked an optimal vision of where this country and its sectors were heading, and even today the need to diversify does not appear to be given the type of urgency required, and the Central Bank report laments this in the case of alternative energy. Is it therefore sensible for us to ignore what made us a nation, even though we accept the need to allow new alternatives into the mix? I am afraid that we have long past the threshold of being a society of consumption, which is placing pressure on our reserves as we continue to be unable to create sustainable productive sectors.

The IMF commentary. The IMF completed yet another Article IV consultation recently and last week released its summary findings; and while there are no real surprises, if we understand our current position and the age old approach of the agency, there are a few items worthy of note.

The IMF has been able to confirm the performance measures and statistics provided by Government as recent as Budget Day, albeit without the fluff, and letting the information speak for itself;

While progress was made with the current account deficit our debt situation (101 per cent of GDP) remains of significant concern in its own right, and I see no need for comparison to any other nation to place our own urgency into context, as we have a responsibility to ourselves;

We face competitiveness challenges and I am concerned that our competitiveness project has not been given centre stage as it should be;

The IMF advocates strong fiscal adjustment and structural reforms –– it is clearly not happy with the former to date; so this seems to spell more hardship for Barbadians in the short to medium term. Structural reforms can be deep and painful, and need to be handled carefully in the context of our need to adjust overall, but the rationalization of the statutory corporations among other actions are a much needed start;

The need for continued ambitious adjustments is onerous in the context of the challenges and difficulties under which Barbadians (both individuals and business) are experiencing. However, I fully support the call for greater fiscal rule and prudent management while still facilitating growth and exports;

The call for reduced spending was one element missing from the recent Budgetary Statement, but must be a vital part of the adjustment mix in the short term as revenue-raising measures primarily taxation can and will stagnate the economy through reduced consumption;

The IMF also added its voice to those of us concerned about the financing of Government by the Central bank and its printing of money.

Our country is not out of the woods by any stretch of the imagination, but the Central Bank, IMF and all other data suggests greater urgency on implementation and placing of our priorities if we are to make this adjustment well worth our while. We speak about safety nets for the most vulnerable; and many Barbadians now feel that that category of persons is expanding more rapidly than it should be.

We all have to come to the rescue of our dear nation. Let us not wait on or be taken for granted by politicians and our other leaders. Each of us has a responsibility to this country.

(David Simpson is managing director of Prestige Accounting Inc.)

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