Prepare for more bitter economic medicine!

The Opposition Barbados Labour Party (BLP) Thursday stopped short of saying “we told you so”.

However, with Governor of the Central Bank of Barbados Dr Delisle Worrell currently using the dreaded ‘d’ word –– devaluation –– amid a worrying decline in this country’s foreign reserves, the Opposition’s lead spokesman on economic matters Clyde Mascoll has warned of more belt-tightening measures to come.

“Now that Government’s policies have failed as predicted, the Governor is using the threat of devaluation to sell the need for more taxation and/or cuts in Government expenditure,” Mascoll said.

The warning came on the heels of a now seven-year-old homegrown fiscal consolidation programme, which the BLP describes as an abysmal failure.

It has been highlighted by over 3,000 public sector layoffs, as well as increased taxation. Within the last two years alone, Government has introduced a number of levies –– the latest being a two per cent National Social Responsibility levy which aims to raise in excess of $100 million in revenue per year.

That levy followed two other taxes that were announced in June 2015.

As of January last year Barbadians started paying an additional 4.5 per cent Value Added Tax (VAT) on their cellphone use, bringing that VAT to 22 per cent. That measure was expected to rake in approximately $32.7 million annually.

This was coupled with the ten per cent tax on sweetened beverages that was also announced in June 2015, and started that same year. In addition, the bank asset tax was increased from 0.2 per cent to 0.35 per cent retroactive to April 1.

However, this has done very little to ameliorate this country’s deficit position as economic growth remains in order of one per cent while Government’s overall debt has ballooned to about 108 per cent of gross domestic product as at September 2016.

In his January 2017 economic newsletter, Dr Worrell admitted that Barbados had repeatedly failed to achieve the balance between its foreign exchange outflows and inflows necessary for a stable economy. He therefore called for further restrictions on public spending in order to protect the country’s foreign exchange reserves, while cautioning “the reserves are what protect us against the devaluation of our currency”.

And though suggesting the island’s future was still exceptionally promising, the Governor further warned that “it will not happen unless we make it happen, and like all worthwhile objectives, realizing the vision will not be painless”.

In response, Mascoll, a respected economist, said “this means that the suffering Barbadians have been enduring for the last eight years has been in vain”.

He also suggested that Government had been lying all along to the people of Barbados about the country’s economic health.

“Not so long ago, the Government and Dr Worrell were preaching about the adequacy of the country’s foreign reserves. They said there was no debt problem. At one point the Central Bank also denied the printing of money. But one after one, Barbadians have lived to see that these statements were inaccurate,” the BLP spokesman said in a statement today.

However, he suggested that Dr Worrell had finally come around to the position taken by the Opposition, as well as regional and international economists, about the state of the economy.

“Dr Worrell confirmed all that we have been warning about when he said that Barbados had repeatedly failed to achieve the balance between its foreign exchange outflows and inflows, necessary for a stable economy,” Mascoll said.

Describing the overall message as “a bitter New Year economic pill” for Barbadians to swallow, he warned the country not to be fooled into thinking otherwise.

“The decline in the country’s foreign reserves, which persisted into the last quarter of 2016, is at odds with this positive talk about the tourism sector,” he said, while arguing that “Government, not the Governor, needs to say clearly what went wrong and explain to Barbadians how further fiscal measures will be implemented.

“Or, will we be again treated to a situation where the Minister of Finance comes out in disagreement to Dr Worrell’s position?” Mascoll asked, while stressing that “we simply cannot go on like this.

“The Governor should not be the one bringing this news on fiscal policy. Government needs to come clean with the public and outline what is really going on in the economy,” he maintained. 

4 Responses to Prepare for more bitter economic medicine!

  1. Ali Baba
    Ali Baba January 6, 2017 at 12:44 am

    I TOLD U SO..THE (DLP) DEMONIC LYING PARTY

    Reply
  2. Loretta Griffith January 6, 2017 at 12:48 am

    What about all these second hand or used vehicles that are being imported? What about persons on lower Broad Street openly purchasing US Dollars?
    Like the over worked record, this country is crying out for some form of revolution.
    It appears there are too many square pegs in round holes, resulting in sycophancy.
    I am tired of all the rhetoric. We need real action for 2017 and beyond DV.

    Reply
  3. Hal Austin January 6, 2017 at 3:48 am

    Dr Mascoll, the most distinguished of local public economist, is once more right. We are knee deep in the mess. What is needed, however, is not just someone pointing out the incompetence of this government – we have known that for the last eight years – but what a BLP government would do to reverse the economic meltdown.
    First and foremost must be replacing Dr Worrell as governor, he has shown himself as not fit for purpose; then part of the Bds$1bn foreign reserves must be used to set up a balance sheet bank; that would take no more than $50 to create a post office bank. |With 18 post offices in place, all that would be needed would be technology in to the payments system and retraining of staff.
    The best way to do this will be by rolling out the post office bank branch by branch; starting in the country and working its way in to town.In this way the gremlins will be sorted out. We cannot allow our financial system to be held to ransom by foreign banks.
    Then a BLP govt must carry out a comprehensive audit of government property, including its massive land bank; put in place a programme for urban regeneration, with a legal requirement to give small construction firms part of the work; also start at a simple but effective level by re-introducing some of our old industries and services: develop and expand our only world-class product, rum; re-introduce the shrimp fishing industry; refurbish the dry dock and aim at the small luxury yacht market; reform the educational system, making it compulsorily bi-lingual from age five to 16; abandon the drive towards sixth forms in all secondary schools and introduce specialist further education colleges; the list is endless. But, very important, treat the Chinese wiwth suspicion.
    The first term of a BLP government will hit the ground running, to use an exhausted phrase.
    The suspicion is, however, that the BLP either has no idea what it would do in government or it is relying on the silly notion that to publish ideas now will allow Sinckler to steal them. Nonsense.

    Reply
  4. carl January 6, 2017 at 4:08 pm

    did a review on Barbados today ….and gave it a 5 star …..

    Reply

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