We are close to ducks’ guts, says economist

A leading economist is warning that the island’s foreign exchange reserves will likely sink even further by the end of the fiscal year in March.

Soon after Governor of the Central Bank Cleviston Haynes announced today that the reserves had fallen to $410 million, or 6.6 weeks of import cover as at the end of December last year, University of the West Indies (UWI) lecturer Jeremy Stephen said the worst was yet to come.

Stephen said in video posted on Facebook that if Government did not quickly slash its expenditure, and if international oil prices continued to climb, come the end of March the reserves could plummet to just five weeks of import cover.

“We are looking at five weeks if that Barbados National Terminal Company Limited money don’t land; we are looking at five weeks if that Hilton money don’t land. You saw the Governor stressing on speed and being able to make key decisions quickly. But you have an election coming up and nobody wants to rock the boat,” he said.

In addition, Stephen said another credit downgrade was all but certain, and if inefficiencies in the public sector were not eliminated with the level of urgency required then “we are going to be spinning top in mud”.

“We are at a really precarious time in our history. If we can’t get the investors in and we are not achieving a growth agenda as a country, but a consolidation agenda, we are in ducks’ guts,” he said.

The former Barbados Economic Society head said there were signs in the economic report presented by Haynes today, that “we are now serious about the [economic] situation”, but he was concerned that “we are going about it in a really messed up way”.

He explained that Government seemed more concerned about raising revenues through taxes rather than trying harder to trim expenditure, which grew by $9.9 million during the first nine months of the current fiscal year.

Meantime, regional economist Marla Dukharan, who two days ago said the reserves had fallen to $482 million at the end of November last year, said the 4.4 per cent increase in prices was expected because of the rise in the National Social Responsibility Levy and other tax measures introduced last year.

She said while the tax measures, which were designed to constrain consumption, seemed to be working, “it has not been sufficient to arrest the decline in reserves or to actually see a reverse in that trend where we would really like to see”.

Though welcoming the reduction in the fiscal deficit, which fell to around 3.7 per cent at the end of December, as well as the more than $200 million revenue intake, Dukharan told a local radio programme expenditure was still an area of concern, pointing to increases in transfers and subsidies.

She also suggested that in the short term Government could “relax the foreign exchange control where you can allow foreign currency deposits.

“Part of the reason you would want to do something like that is if there are a lot of Barbados residents that have money abroad, the chances are, if they are confident in the economic trajectory of the country they might want to bring their money back home and use this money for investment purposes and consumption and buy homes. So that is a short term fix that could possibly help to alleviate the decline in reserves,” she explained.

Also speaking on the radio programme this afternoon economist Ryan Straughn, a candidate for the Opposition Barbados Labour Party, suggested that Government should employ a growth strategy instead of raising taxes.

“We have to pursue a credible growth plan whereby the private sector feels confident . . . that when it goes out and makes an investment that the Government will not turn around the next year and change the policy and jeopardize that investment. Therefore there needs to be a strong and credible plan for sustainable growth,” he insisted.

Straughn argued that the fall in foreign reserves “further compromised” the island’s valued fixed exchange, which currently stands at BDS$2 to US$1.

Though welcoming the drastic reduction in Central Bank financing for the first nine months of the current financial year, Straughn said the bank should not “beat itself on the chest” just yet since it was now up to Barbadians and overseas investors to invest, which he said was still uncertain given the low confidence levels in the Barbados economy.

16 Responses to We are close to ducks’ guts, says economist

  1. Mack January 31, 2018 at 11:33 pm

    This gentleman need to seperate his profession as an econamis from his aspirations to become a polatician.

    It is like with glee when he talk about the misfortune of the Barbados economic state.

    He must realise that he is a Barbadian and on the sinking ship too.

    Reply
  2. luther thorne February 1, 2018 at 12:23 am

    The people of Barbados made a monumental mistake in 2008 when they stupidly voted for the DLP.

    After the DLP destroyed Barbados between 1986 to 1994, they were expected to be in lOpposition Political Wilderness for 40 years. But No , we foolishly voted out the BLP after a sterling performance and voted in this crowd -DLP – and whups !! Deja vu all over again 1991 – 94 !!!!!

    How did we get back here ?

    THE DLP IS TO BLAME (de people too)

    SO CALL DE FRIGGIN ELECTIONS

    DEMS NOW: DEMS NEVER EVER AGAIN

    Reply
  3. Pat Clarke February 1, 2018 at 1:34 am

    Do you really think that Barbadians who have money outside of Barbados will foolishly bring it into Barbados for this Government to take it all from them and end up with nothing after working so hard in the cold. This Government has to go before anyone will even consider bringing their hard earn money here. More than likely if you have money outside of the country you also have the opportunity to live wherever the money is being kept so that is an option. In fact I can see people who have money here trying to get it out before the dollar gets devalued which it definitely will if this Government is returned to office.

    Reply
  4. Pat Clarke February 1, 2018 at 1:36 am

    Hopefully they will wise up before it I too late.

    Reply
  5. Darcy scott February 1, 2018 at 1:40 am

    What had happen is bajan take a lot of soft talk out of the mouth of the d l p politicians so with elections around there are coming again I listen to the soft talk last. Week from p mand. Again from all the minister at the Luther Thorne school too so here we go again it will be more Deja’s vue

    Reply
  6. John Everatt February 1, 2018 at 2:28 am

    I for one do not see that there will be any change in fiscal policy before the election. This is a lame duck government at the moment and can not carry out any new home grown policies as they are not likely to survive the elections. But it has recently come to my attention that many people are just fed up and are not even going to vote. This is a huge mistake and may result in a far closer race than is currently predicted. I would hope that they change their minds and realize that their vote makes a difference.

    Reply
  7. Shirley Trotman February 1, 2018 at 5:25 am

    It’s so sad where we have found ourselves.

    Reply
  8. Roverp February 1, 2018 at 6:13 am

    This BLAME everyone expect themselves government had no clue. They failed to to tackle problems properly and created a whole HEAP more. Their focus was on DLP/DEMS FIRST and the Country suffered.

    Reply
  9. harry turnover February 1, 2018 at 6:37 am

    Yesterday one FRANCIS ….doan know if he is FRANCIS THE TALKING MULE questioned what AGENDA an ECONOMIST had when she stated that the reserves had fallen by 68 MILLION.
    Now we are hearing that it is MORE
    Wonder what AGENDA that same TALKING MULE has to say NOW about the Governor of the Central Bank who comes and says the SAME RH thing ,but SLIGHTLY WORSE
    Like I said yesterday you have been proven to be a FIDIOT….ya TALK too much.

    Reply
  10. Freeagent February 1, 2018 at 7:38 am

    Let’s call election, change the government, and see if that will bring God to earth.

    Reply
    • David Brathwaite February 1, 2018 at 11:42 am

      It would not bring God to earth, but it would bring leadership to Barbados and that would lead to improvement over time.

      Reply
  11. Carlisle norville February 1, 2018 at 11:51 am

    I know for a fact that we have some real procrastinators here in Barbados, we have bagans telling you, i work real hard & nuff hrs to get what i have today, most bagans programme
    to sit on their ass, keep their mouths shut when it comes to their well being, everyday talk & more talk on brass tacks,( some of the speakers on brass tacks are very intellectual, very ofay -about the running of this island( yet they frighten real bad, & dont have the guts to challenge this ridiculous retarded prime minister we have, who has de audacity to tell Barbadians i will call elections when i ready (j**k A**

    Reply
  12. sticks and stones February 1, 2018 at 1:56 pm

    Still waiting to hear from the leadership of the blp Mia what are her plans for the betterment of the economy.

    Reply
  13. jrsmith February 1, 2018 at 3:01 pm

    Again I will say this , this horrible government have the chance of being voted back in office , if the 2 terms is anything to go by they have a big chance ………….. For the two terms neither the public or the opposition politicians, had the guts or the balls to publicly challenge the government …………. Our bajan politicians don’t want change in Barbados , because they have the upper hand on the black masses, just where they want them , frighten and scared to challenge them……..
    The peoples attitude bearing pain for 10 years , not trying to get rid of the rubbish politicians one by one and hoping it will all come good at a general election………. If the people really need change it will happen, but what have they said so far about change nothing …
    Are we going this time around to may be have a coalition government ………. We will see…………

    Reply
  14. milli watt February 1, 2018 at 5:43 pm

    ducks guts…….nah this country at the back end

    Reply
  15. David Hall February 5, 2018 at 7:23 pm

    The DLP’s mis-management of our economy has brought nothing but carnage to our once cherished way of life.

    Reply

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