Barbados is the one of the few countries in the world where the population will barely murmur when a political party implements a policy that it condemned a few weeks earlier. Perhaps this speaks to our docile nature but I believe it is either an indication of the very low premium we put on trust and accountability from our politicians or it relates to our hunger for material benefits dispensed by politicians. We’re afraid to offend.
I’ve reached that conclusion following the Democratic Labour Party’s (DLP) introduction of a Bds. $355 million stimulus package in its March 18 Estimates of Government Expenditure and Revenue for 2013-14 fiscal year. Minister of Finance Chris Sinckler said government anticipates that this new stimulus package and the Bds. $300 million from traditional estimates will provide an injection of Bds.$600 million in capital works spending that will improve the local economy and create at least 1,000 new jobs.
I like that, jobs and economic improvement but that does not close my mind to the wider issue or calm my worrying concerns!!! FOUR short weeks ago earlier, during the general elections campaign the DLP cautioned us, voters, against supporting the opposition Barbados Labour Party (BLP) pointing out that their proposed $45 million stimulus spelt destruction to our small import-dependent economy.
In fact on February 7th Minister of Agriculture Dr. David Estwick speaking at the height of the General Elections campaign said if BLP’s stimulus policies were “ever adopted, it could lead to a devaluation of the Barbados dollar.”
“If you allow Owen Arthur (the then opposition leader) to practice the policies of stimulus we will have a balance of payments crisis. The IMF’s first prescription is devaluation, and its second is sending home people,” Dr. Estwick warned.
In addition, I’d read where Governor of the Central Bank of Barbados Dr DeLisle Worrell said ‘unequivocally’ that government stimulus could not create sustainable growth in the economy. That was in January when the Barbados Chamber of Commerce and Industry and the Opposition Barbados Labour Party (BLP) were promoting the need for a stimulus to increase consumer demand.
Dr. Worrell said there was no quick fix to Barbados’ sluggish economic performance adding that growth must be private sector led with the focus on improving competitiveness. He is not a politician but rather an objective voice and an experienced economist. I trust his views on this plus Professor Michael Howard, who is well-known for his work in public finance called it ‘economic madness’. Therefore their views strengthen the weight of what the DLP was saying for many people not schooled in economics.
It is therefore reasonable and nationalistic to demand an explanation for the DLP’s ‘switch-mout” action and to get a comment from the Governor about the $600 million or at least the $355 million portion. Professor Howard has already spoken on the matter and has not wavered on his opinion but the Governor has so far steered clear of the issue.
The parliamentary opposition should be happy over a stimulus at least from the perspective that it gives them boasting rights for tabling the prescription. They are unlikely to say much of the DLP’s change-of-tune since jobs were mentioned and the sitting BLPites will be wary of any comments that their opponents can twist to suggest they are against job creation.
But as citizens, Barbadians have to ask the DLP for a reasoned clarification about their policy switch; an explanation not tightly woven in a web of jargon. At least the administration should reconciled their reasons for vehemently decrying the opposition Barbados Labour Party’s small stimulus package yet introducing a package, at least eight times bigger. Is this bigger one less likely to trigger devaluation?
The dividing issues, I believe are the difference in the size, the BLP’s proposed Bds. $45 against the DLP’s $355 million; and the direction of this spending with the DLP targeting capital works against the BLP’s aim at diversification of the country’s health and education systems. Perhaps, another question which could be asked is whether DLP post-election stance was influenced by some development in the world or country’s economy and financial position, though I doubt any significant shifts took place in that short time frame.
The situation, however, demands answers and when governments fail in this respect, people generally look to the fourth estate (the media) to present vigorous and focused interrogation of the topic. Our state-owned television station had a little morning chit-chat on the subject and I waited for some facts that would speak to a reconciliation of government’s before and after general elections’ position.
No direction came from that source except to say that we need to involved thinkers to come up with creative ideas. Cheese-on-bread!!! We have been engaging thinkers for decades. The country has files of suggestions and plans that if converted to digital would burst cyber-space. Moreover, government has already earmarked capital works and the DLP-proclaimed get-it-done minister, Michael Lashley is gearing up to start his Bds. $80 million road building programme in July. CBC promises to go a little deeper in another segment, so I have hope.
The Nation newspaper in its editorial pointed at the divide by noting that “given the slow growth of the economy; a stimulus package seems desirable, though there will be contrary opinions as to the efficacy of the kind of stimulus proposed by the Government as opposed to the stimulus aimed more directly at putting money into the pockets of consumers, which more accords with the Opposition’s proposals.”
My DLP friends, who debate the subject using a hit and run mode, speak in similar vein by noting that BLP’s programme would encourage consumer spending and as we all know given the openness of our economy, this means imports and a drain on our foreign reserves. My follow-up question to them is whether Bds. $45 million will put a greater strain on the country’s scare foreign reserves than Bds. $600 directed at capital works. That is a question, not an opinion.
“More jobs, strong multiplier effect and increase capacity,” they answer and run.
But I am unease about the situation. At his swearing-in ceremony, (yes, that early) Prime Minister Freundel Stuart said: “We have to take some initiatives here which do not imperil our foreign exchange position but, at the same time, give a little life to what is going on locally at the business level and put consumers in a position where, by their spending, they can stimulate business activity and so on.”
“So these are priorities and of course fortuitously and fortunately we have the Estimates of Revenue and Expenditure to be debated in two or three weeks time and during that debate the Minister of Finance and myself will be talking through some of those issues so that the country will be clear where it is we intend to go over the next few months.”
To me that was a broad hint of a stimulus package and suggests the DLP perhaps held the idea during the general elections campaign, so why wasn’t it revealed to the public? Why ridicule the opposition’s smaller packer when you could’ve hyped yours as of superior quality and quantity? In the reverse, if it is an afterthought, then are we to assume that the government’s package was or wasn’t rigourously analysed? How many more similar change of plans can we expect?
Generally though, people are saying they are not concern neither are they surprised by things politicians do because everyone knows that general elections are about getting elected or re-elected depending on where you are sitting. They say campaigning has little or nothing to do with honestly-held beliefs and more to do with saying what the people what to hear in a believable way.
Therefore many like Pontius Pilate say they’ve washed their hands of this ‘switch-mout’ behaviour in a bid to keep their jobs or place in the winner’s crowd even if they have lingering concerns that this route could kill Barbados’ economy. For me, I have listened to recent Senate debates and if I’ve learnt only one thing from the government benches it is that the DLP administration is practicing the politics of explanation, so I am holding my breath waiting for a reasoned clarification on this stimulus package.
Let me emphasis, my point is not whether the stimulus is beneficial or not but I am looking at the wider issue. Were you upfront with Barbadians regarding this matter of stimulus? Has the devaluation threat disappeared?
Barbadians have seen and felt the effect of devaluation through the experiences of their friends and relatives in Jamaica and Guyana and as they do business in those countries which are large compared to Barbados and superior given their natural resources. These countries were into socio-economic despair as they fought to drag themselves out of what seems to be the sinking sands of currency devaluations under the International Monetary Fund’s thumb. Barbados, a tiny dot that slipperily depends mainly on tourism, cannot bear currency devaluation; it is so heavily dependent on imports, therefore the DLP general elections’ warning about devaluation was scary then and it remains scary.
If we are taking that risk in a ditch to make things better, tell us. What policies are you imposing to ensure that the country achieves the delicate balance or manageable imbalance between foreign exchange earnings and spending? That perhaps, is the true price tag of this stimulus package which may help us ‘buy jobs and economic growth’.
- Manifesto WARNING! (bajan.wordpress.com)
- Tough Economic Time for Barbados (Jamaica Observer)
- St. Lucia Government Launches Multi-million Dollar Stimulus Package ( Caribbean Elections blogs)