Rating Agency’s Report Vindicates Ms. Mottley

Submitted by Sylvan Greenidge, former BLP Press Secretary

Leader of the Opposition Mia Mottley

Barbadians were recently given a very rare opportunity when the Prime Minister addressed the state of the economy in House of Assembly on Tuesday, November 17, 2009. His address followed an assessment done by one of the leading credit agencies, Standard & Poor’s and once again the comments contained in the report sparked robust debate in our Parliament and the wider society. It is most unfortunate that in recent times Barbadians have had to rely on such reports from rating agencies or public pronouncements from the Opposition Barbados Labour Party to get some insight as to the state of the economy. Except for these occasions Barbadians are left to wonder. There are those who will be quick to advance the argument that the Prime Minister has been holding press briefings on the economy at designated times but the truth of the matter is that Barbadians are no wiser at the end of these briefings.

The most recent report on Barbados, though it did not speak to a further downgrade of our credit rating, at least for now, changed our economic outlook from stable to negative. As harmless as this may appear to the ordinary man/woman in the street, economists and other interesting persons would agree that the challenges facings our economy are mounting with hardly any imaginative or pro-active ideas coming from the DLP Government to arrest the slide.

It is a statement of fact that the world is in recession, however I am yet to be sold on the much-touted notion that the current recession is the worst since the 1930’s. The evidence provided thus far simply does not support that view and until such evidence is provided I will remain firm in my position.

A number of questions beg attention from this Thompson administration. Have the economic problems currently facing Barbados been made worse as result of the economic decisions of this Government? Are Barbadians satisfied that this Government was timely and pro-active in its response and creative in its economic policy in addressing the country’s economic problems?  Does this DLP Government possess the political fortitude to lead Barbados out of this current recession? So many questions – few answers.

From as early as the third quarter of 2007, the rapid rise in oil and commodity prices was showing signs that there was some instability in the global market. By the end of the first quarter of 2008, it was put beyond doubt that a global recession was imminent. Of course by the start of 2008, Government was faced with sad spectacle of the financial collapse of Clico Trinidad, quite unrelated to the recession, but with devastating consequences for Barbados.

It cannot be a source of comfort to Barbadians that some eighteens months following the announcement of the collapse of Clico Trinidad, one of its major subsidiaries in Barbados, Clico Barbados, remains embroiled in speculation of mismanagement and financial uncertainty. Placing Clico under judicial management and the execution of a forensic audit was all that was required to begin to cure the ills of this company, but instead the Government, for reasons best known to them, chose to play a game of cat and mouse with this rather explosive matter. In spite of the numerous calls from the Leader of the Opposition, the IMF and others, Clico Barbados remains an albatross around the necks of taxpayers of Barbados and an economic threat to the stability of our economy.

Likewise, Barbadians cannot be comfortable with the fact that almost two years after the first signs of the global recession, no serious attempt has been made to prepare the Barbados economy for its impact. From as early as the first sitting of this new Government, back in 2008, Leader of the Opposition, the Hon. Mia Mottley has been warning the Thompson administration that the economy needed to be stabilized and a stimulus package implemented to minimize its impact on the overall economy.

I recall during the 2009 budget debate when Ms. Mottley warned the Prime Minister about the rapid rate at which the foreign reserves were falling, an obvious sign that the economy was hemorrhaging her comments provoked laughter and humor from Government members. On that occasion, the Prime Minister turned to his Minister of Health and requested that an ambulance from the QEH be summoned for Ms. Mottley. He sought to give the impression that Ms. Mottley was misleading Barbadians on the issue of the falling foreign reserves. Ms. Mottley had been proven to be correct.

It was certainly no laughing matter to Barbadians to hear some months later on VOB’s call-in programme, Brass Tacks for Friday, November 13, 2009, Avinash Persaud lament that Barbados’ foreign reserves now stand precariously at a mere 20 weeks supply of import cover. In other words Barbados has only 20 weeks of foreign exchange left to pay for the food and other goods and services it imports from abroad. Thompson is yet to explain to Barbadians how we got there. Thompson inherited foreign reserves that covered over 40 weeks supply of imports or $2.4 billion.

I go further. Barbadians heard the Prime Minister during the said budget debate of 2009, in his response to the call from Ms. Mottley for a stimulus package, indicated that he did not understand what the Opposition was talking about. He said then and maintained up until recently that he had a stimulus package in place long before President Barrack Obama of the USA. He also said that it included the purchasing of equipment for the QEH and the erection of school fencings. That was in March 2009.

If ever there was an occasion that should convince Barbadians of the double talk of the Prime Minister and his obvious state of confusion on how to navigate Barbados through these tough economic times, it came in the Nation Newspaper of Wednesday, November 18, 2009 under the headlines, “No Stimulus”. The Ricky Jordan story reported the Prime Minister as having said that a stimulus (meaning stimulus package) would not be prudent at this time because it would have a negative impact on imports. On another occasion I will argue the merits and demerits of the statement. The question that must be answered is this, what has changed in Barbados’ economic position between March 2009 and November 2009, other than the change in the Governor of the Central Bank that has led to the Prime Minister’s change of heart on the need for a stimulus package for Barbados.

I am convinced that the Barbados economy has been mismanaged over the last eighteens months, a charge for which Prime Minister Thompson’s cannot escape. His inability to grasp the more deeper and technical workings of the economy may well explain his over reliance on a large number of economic advisors. In the absence of an appreciation of the subject matter, an over dependence on advisors will become commonplace. Unfortunately, when you are being advised by such a large cross section of individuals from varied trained backgrounds and economic concepts, then the process of decision making can be painfully confusing as evident in this administration’s attempt to grapple with the current economic recession.

Conversely, the BLP must feel a sense of satisfaction that Opposition Leader Ms. Mottley has demonstrated a level of knowledge and understanding of the challenges currently facing the country. In fact she has been vindicated in both her analysis of the performance of the Government and her predictions on the economic outlook of the economy. Both rating agencies as well as the IMF have now confirmed what she has been saying since July 2008. It is a serious indictment on the Thompson administration when Olga Kalinina, credit analyst with Standard and Poors can report that “it is the delay and failure to be pro-active that is causing most of the problems in the Barbados economy”. This is precisely the point that Ms. Mottley has been making in her budget response of 2008 when she spoke of the danger of the DLP’s governance by delay.

Ms. Mottley has been far more articulate and has demonstrated a greater understanding of the precarious state of the economy than Mr. Thompson and the DLP should take note. At times like these people need a leader with the necessary skills to deal with the dicey issues that confronts the country and its people. Thompson’s style of governance by serendipity will not fit the bill. His days of political kite flying are over and it is now time to show some depth of intellect, creativity and competence. This maybe asking for blood from a stone. In the name of credibility and certainly if history is to be kind to him, Thompson must allow the second opportunity afforded him by the electorate of Barbados to manage the office of the Ministry of Finance to end on the same embarrassing note that it did under the last DLP Government of 1994.