Stephen not optimistic about economic recovery

The writing had been on the wall for the Barbados economy for some time, and Government should have taken the necessary steps to avoid the current situation, says economist Jeremy Stephen.

And he is warning that unless some tough medium-term strategies are employed investor and consumer confidence will not return anytime soon.

The economist said Government must find ways to increase tourism spend; while carrying out public sector reform; finding new drivers of economic growth; and ways of ensuring food security while giving incentives to farmers to improve the performance of the agriculture sector.

However, Stephen said those efforts were being stalled due to international occurrences, the lack of political will, tight fiscal space, and Government’s inability to understand what needed to be done and the tools required to execute proficiently.

“I honestly think a lot of it is the international environment and our unwillingness to see the writing on the wall. International business for instance, we had fair warning,” Stephen said, while pointing to the changes in the Canadian tax laws as one example.

“So you had fair warning since 2008/2009 that there would have been a lot of difficult headwinds in international business and we had enough time for Invest Barbados to repurpose and go out and find business,” he said.

The economist said it seemed Government was afraid to take risks and the “bold decisions” that were needed, adding that it was now too late for any form of public debt refinancing without hurting its ability to repay its Credit Suisse loan.

“Before that loan is paid off in 2018/2019 it is going to be a tough cookie, but the Government had about three or four years ago, the opportunity to refinance certain loans like Jamaica [did] and still maintain credibility even if it took a ratings hit in the short run. The reason they put off doing that for so long is the risk of being able to take a ratings hit. But it was almost certain that there was going to be a ratings hit given how you allow the economy to flounder for years.”

The latest Central Bank report indicated that the economy grew by 2.2 per cent, but the reserves dropped to just 9.7 weeks of import or $635.5 million, well below the 12 weeks benchmark.

Stephen told Barbados TODAY while he welcomed the 2.2 per cent economic growth, when inflation and other factors were considered he was “not overly impressed”.

He said he did not expect investor and consumer confidence to return for another two to three years, although he anticipates an uptick in spending as the country approaches a general election.

He added that any government assuming office following the next election, would have to drastically cut expenditure in order to help boost investor confidence.

In a separate interview, Executive Director of the Institute of Chartered Accountants (ICAB) Reginald Farley said it was necessary for Government to implement a “coherent” medium-term strategy to ensure sustained economic growth, as well as growth in the foreign exchange reserves.

Pointing out that the major challenge for the economy remained the high fiscal deficit and low foreign reserves, Farley said there was also a need to boost investor and consumer confidence.

The former Minister of Economic Development said while taxation was necessary Government simply could not tax its way out of its current economic problems.

“We need to deal with the short-term issues of closing the fiscal gap, boosting of foreign exchange, but we are coming close to the end of the year and I am not too sure we are making enough progress on what the minister announced – the medium-term economic plan. I really think that the sooner we are able to engage public, private, trade union on that medium-term restructuring, which is needed for Barbados to improve competitiveness and to improve all of our investment matrix that we are going to be in stabilization mode for too long, rather than looking to restructuring and sustainable growth,” Farley explained.

He said while ICAB was pleased with the overall 2.2 per cent GDP growth, which was driven mainly by tourism, he was concerned that the debt and Government expenditure continued to be “a drag” on the economy. 

31 Responses to Stephen not optimistic about economic recovery

  1. Epaphras D. Williams
    Epaphras D. Williams August 15, 2017 at 1:58 am

    No disrespect to the pundits from UWI but can we hear from other economists or does than mess with the status quo? It’s like all our thinking is coming from the same place over and over and nobody is any wiser.

    Reply
    • Duane Burke
      Duane Burke August 15, 2017 at 3:53 am

      I am not sure what you mean. Similar sentiments have been echoed by the IMF, Rating Agencies, CDB, the various Private Sector Associations among many others. Also if you filter through comments by the Past and Current Central Bank Governor you will note the same. In addition the Deficit Committee report prepared by members of Government, Unions and Private Sector provided a similar summary analysis as well as a similar outlook.

      Reply
    • Duane Burke
      Duane Burke August 15, 2017 at 8:34 am

      We do have a tax imbalance. We spend more than we make. I would recommend reading the Deficit Committee report

      Reply
    • Roc Kinn
      Roc Kinn August 15, 2017 at 8:45 am

      BT always turns to the likes of Stephens and Robert Pitcher. Their comments are predictable. Whatever strategy put forward by authorities wont work. Stephens offers no solutions only negativity. Reading him is an exercise in hopelessness.

      Reply
      • O. Walrond August 15, 2017 at 3:37 pm

        JEREMY STEPHEN:

        “The economist said Government must find ways to increase tourism spend; while carrying out public sector reform; finding new drivers of economic growth; and ways of ensuring food security while giving incentives to farmers to improve the performance of the agriculture sector…
        He added that any government assuming office following the next election, would have to drastically cut expenditure in order to help boost investor confidence.”

        Reply
    • Kevin Watson
      Kevin Watson August 15, 2017 at 9:35 am

      That’s not a true statement Roc Kinn

      Reply
    • Alicia G. Burton
      Alicia G. Burton August 15, 2017 at 11:29 am

      Jeremy Stephen offers endless solutions. I’m sure he doesnt get up with joy in his heart to pronounce the trategic circumstances Barbados is in.

      Reply
    • Duane Burke
      Duane Burke August 15, 2017 at 12:57 pm

      Roc Kinn incorrect and very inaccurate comment. The Truth hurts sometimes and window dressing it is not his style.

      Reply
    • Duane Burke
      Duane Burke August 15, 2017 at 1:50 pm

      The Deficit Committee report was written by Economist from Central Bank, Economist from Ministry of Industry, Director of Planning Ministry of Finance, 2 from Unions and 2 from Private Sector. The analysis was pretty much the same. Further there were numerous alternative options presented. All were ignored in favour of a flawed from the start NSRL. Thus not sure what alternatives that he should be offering if other options are being ignored.

      Reply
    • Epaphras D. Williams
      Epaphras D. Williams August 15, 2017 at 4:53 pm

      Geraldine Walrond There are numerous persons from abroad who have significant interests on this island but they have no say in the management of the economy, Don’t confuse sovereign and stupid. If people from overseas can help why not engage with them? Are they not the main source of FX?

      Reply
    • Duane Burke
      Duane Burke August 15, 2017 at 4:58 pm

      Epaphras D. Williams but we have very capable and knowledgeable people here. We don’t need to go outside. You maybe surprised at the technical expertise here.

      Reply
    • Epaphras D. Williams
      Epaphras D. Williams August 15, 2017 at 5:00 pm

      You are one for sure. All good. I like the possibility of exploring the global village

      Reply
  2. Lisa Moore
    Lisa Moore August 15, 2017 at 6:08 am

    Aren’t they any other economists around?

    Reply
    • Kevin Watson
      Kevin Watson August 15, 2017 at 9:35 am

      To say the same thing or worse?

      Reply
    • Lisa Moore
      Lisa Moore August 15, 2017 at 9:37 am

      That’s why I would like to hear from someone else

      Reply
    • Kevin Watson
      Kevin Watson August 15, 2017 at 11:48 am

      OK….this economic growth int likely with this new tax. Kevin Watson 2017

      Reply
    • Epaphras D. Williams
      Epaphras D. Williams August 15, 2017 at 4:40 pm

      Lisa Moore I may have said this before but you are a necessary thinker. Keep on

      Reply
  3. Santini More
    Santini More August 15, 2017 at 7:07 am

    To para-phrase this article: The DLP have screwed up the economy of Barbados and have taken one wrong turn after the other.

    Reply
    • Eddy Murray
      Eddy Murray August 15, 2017 at 7:21 am

      More’ you can not make a wrong turn if you in no where you going. lol

      Reply
    • Eddy Murray
      Eddy Murray August 15, 2017 at 7:21 am

      Santini More,’ you can not make a wrong turn if you in no where you going. lol

      Reply
  4. hcalndre August 15, 2017 at 7:52 am

    @Lisa Moore; The issue is not with the economists, it`s the PM and the MOFalse information that would not tell it like it is. They would not deal with the IMF because they think that taxing the life out of the same people at home would be the way to go, although they know that taxing the same people every time would not bring the nation out of the recession. Some years ago they were using Greece as their yardstick to compare Barbados with but I have not heard Greece mention anymore. Can you imagine that the want to raise $500m in 6 months? They`re racing against time for the election. With the implication of this Levy thing they can get the money by any means necessary even if they have to take it from your account.

    Reply
  5. Alicia G. Burton
    Alicia G. Burton August 15, 2017 at 11:29 am

    I think some of us want to hear what obviously is not going to happen any time soon. We can look around and see as plain as day the state of Barbados.

    Reply
    • Epaphras D. Williams
      Epaphras D. Williams August 15, 2017 at 4:43 pm

      Perception or reality?

      Reply
    • Alicia G. Burton
      Alicia G. Burton August 15, 2017 at 5:52 pm

      Epaphras D. Williams Do you think things in Barbabos are rosey? and ppl crying out is an illusion ? I am not against other economist opinions, i would stick my neck out and say, their conclusions will be the same.

      Reply
    • Alicia G. Burton
      Alicia G. Burton August 15, 2017 at 5:53 pm

      I would love everyone that appears to be Painting a picture of gloom to be wrong…. but.. alas….

      Reply
  6. Kathy August 15, 2017 at 11:41 am

    Sorry but Jeremy Stephen seems to look into the same economic book each time and come back preaching doom and gloom. He never really offers a solution just a lot of unnecessary long talk that we have heard already. By now most folks know where you are coming from Mr. Stephen.

    Reply
    • John Everatt August 15, 2017 at 12:07 pm

      Well the economic situation has not improved so how can Jeremy Stephen offer a more optimistic opinion?

      Reply
  7. Romeo Crowell August 15, 2017 at 2:10 pm

    I agree !!! If Stephen believe the the country is going in the wrong direction put forward some solutions as an economist.
    Every single pronouncement I can remember from this chap is how bad it is, or this is not going to work. How can anyone take advice from someone that can only offer doom .Even the man in the street knows things are tough. We don’t need and economist to tell us that.
    We want help. If you can’t bring solutions to the table shut up.

    Reply
  8. Romeo Crowell August 15, 2017 at 2:27 pm

    And for those listening, things are not as bad as the doom preachers are making it.
    We need to make hard decisions and we don’t want to face the hard facts.
    The leaders are lying to the people giving them the impression that things can get better with no pain attached.
    If in 1994 the situation was 50% as bad as it is now and we had to implement an 8% cut and thousands of workers got laid off tell me how we can fix it now with no serious pain.
    The same thing with the crime. They fooling the public. A 166 square mile island and you can’t bring crime under control.
    You really hear the weak suggestions being put forwarded.
    I had to laugh when it sounds like you have to secure Carifesta from the public.
    The leaders are trying to make events safe instead of making the country safe. My goodness
    Some thing is grossly wrong with our leaders thinking….

    Reply
  9. Zeus August 15, 2017 at 8:02 pm

    Any of the persons here were around in 2003 and 2005 ….35 and 33 murders we had in this country check and see who the AGs were at the time ….and we discussing leadership

    Reply
  10. Everton Cumberbatch August 15, 2017 at 9:42 pm

    To suggest that there is a need to get more revenue out of tourism, to incentivize the agricultural sector, presumably by empowering local farmers and building more and different economic engines, in all fairness to Jeremy Stephens are tangible and doable ideas to rebuild our economic capacity. Much of this is a social engineering job and the task of political leaders. The challenge is believing that any of these can realise anything significant in the medium turn. And so the hope is in the sale of the oil terminal and the hilton. But even so these only offer some Fx for a few months and buy some time. If we are unsuccessful in realising these in the next four weeks we might just have to bite the bullet and start reducing expendirure. This is not looking good for a long time to come.

    Reply

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