Ryan Straugn, Economist
The following article by Economist Ryan Straughn has been making the rounds in Barbados and is the source of robust debate because it highlights the perilous state of the Barbados economy. This week the hierarchy of the Caribbean Development Bank also noted concerns about the weight of debt which many Caribbean islands are presently burdened. We did not reach the current state in the last five years. Our consumption behaviour which is fed by two fickle economic drivers, tourism and foreign direct investment, will do it every time.
Dispelling Political Myths with Economic Facts
I wish to state at the outset as emphatically as I possibly could, that in a very, very, very small open economy (like Barbados) and in a very, very, very small open society (like Barbados) it is imperative that government’s current revenue always exceed its current expenditure in order to protect the social democracy to which we’ve become accustomed.
I sat down to write this article last week and got sidetracked with more pressing matters and so decided to finish it on reading Tony Best’s column in the Sunday Sun of February 3, 2013. The article shared the concerns of Charlie Skeete another Barbadian economist which are indeed very similar to mine. Elections have been called in Barbados for February 21, 2013 and the campaign has truly begun in earnest. As an economist, I eagerly wait to hear specifics from both the Barbados Labour Party and the Democratic Labour Party on how they are going to deal with the small matter of the public finances.
Read full article @Barbados Economic Society Blog
@Trained Economist
The BLP will raise the ceiling on their Central Bank current account, done!
the reserves cannot help finance a stimulus program. are yu saying that the blp plans to simply print the money, which ishat borrowing from the central bank is. i don’ t accept that, there are too many good economists in the party.
The public sector, lead by the Central Bank of Barbados, is packed to the seams with highly Certificated Economists of every shape, size and complexion. All of a sudden I am to believe that it is up to the silly few among them that have made the decision to enter public life to determine right or wrong with the policy that is to be undertaken. Why are the others then still drawing salaries …?
To the Point
I am now only seeing your comment posted at 10:36 am.
You always seem to miss the point. Even if I divulged information that I gained while employed at NUPW: it is not a crime. However, I believe what Jepter Ince was tantamount to a breach of the Official Secrets Act, and if I am correct, he would be exposing himself to jail time.
You get the point yet.
Sent from my iPad
LAFF-IT-OFF has planted its feet squarely in the camp of the BLP … disappointing since I hold fast to the view that participants commercial Creative activity should be apolitical in their depictions. The crew made a mess of Thompson, Freundal, Jones, Boyce and Sealey and took major stabs at Broomes and Green Verbs of CLICO fame who they referred to interestingly enough by his initials only. Hey all of that was fine until they decided to Big Up Mia Mottley. Now that was a little too obvious and low.
If Foo Foo was still around he would have made Arthur shite …!
@baffy
So ya telling muh dat even de comedians want ta get rid of de dems too?? Wuhlosssss. Um hot in hey!
Just Observing
‘is it time for some means testing”
I BELIEVE SO
this video is obviously not a continuous sequence of words. It would be good if we get the date of the speech being referred to.
I posted on the BES blog and i will post here. This article is somewhat misleading as it does not tell the true story. Yes there is a deficit since 2007 but it did not go into possible reasons that expenditure increased so dramatically.
One of the reasons could be that government changed its method of reporting from cash basis to accrual basis in April 2007. Anyone that knows anything about accounting would know that accrual basis accounts paints a better picture in that it not only reports expenditures that were paid for but also expenditures incurred. Some of these expenses that would now be recorded that were not before would be interest expense on debt obligations.
I would urge people to do the research for yourself on central bank website before accepting these figures thrown out by both parties as gospel.
@Brian
You suggest that ‘one f the reasons ‘could’ be – are you being speculative with your comment?
@ Brian | February 11, 2013 at 4:03 PM |
“Anyone that knows anything about accounting would know that accrual basis accounts paints a better picture in that it not only reports expenditures that were paid for but also expenditures incurred”
We would strongly advise you to listen to your own advice and stay clear of things you know little about.
It’s only a matter of “Timing” that makes the difference. What does not show up today will show up tomorrow once spent or incurred; if you get the drift. It’s all done, in principle, for the sake of matching expenses (or even expenditures) with revenues or the other way around.
So, for the life of Brian the messianic miracle worker’ don’t blame what was brought to book in 2007 on what occurred in subsequent years and vice versa.
Rubbish, little boy!
Rubbish indeed … Brian, try another blog. This one ain fah you …!
I’m not going to reduce this to a name calling match nor am I going to say that i’m an economist. However, in analyzing the figures for those who cared to go look them up. Could you tell me why in the same year the method changed from cash to accrual basis, government expenditure saw a 35% increase from the previous fiscal year. The only other year that came close to to that sort of increase was 1981/82 year which was 26%.
A further analysis of the figures also would reveal that after that dramatic increase in 2007/08 fiscal year, expenditure rose 3% the next year and 2% the year after that.
BARBADOS TODAY!!
ANARCHY or FREEDOM?
an·ar·chy
[an-er-kee] Show IPA
noun
1.
a state of society without government or law.
2.
political and social disorder due to the absence of governmental control. Synonyms: lawlessness, disruption, turmoil.
3.
anarchism .
4.
lack of obedience to an authority; insubordination.
5.
confusion and disorder: Intellectual and moral anarchy following loss of faith in the Democratic system.
Synonyms: chaos, disruption, turbulence; license; disorganization, disintegration
DOES THIS NOT SUMMERISE OUR DAILY EXISTANCE IN BARBADOS.
ANARCHY = SLAVERY
SUBJUGATION OF FREEDOM
ARE WE NOT FREE IN BARBADOS TO SPEAK AS WE WISH ?
AS LONG AS WHAT WE SPEAK MEANS NOTHING.
Ergo:
Barbados Underground
@Jus Mekkin Sport
At least we have freedom to speak so the possibilities are endless. Why don’t you point your comment to the Nation newspaper.
@mekking sport
A spoken word has all the value in the world. Don’t underestimate the power of free speech provided here on BU. What’s needed is for real leaders to tap into that power and use it for the national good.
Just observing
@ Brian | February 11, 2013 at 8:44 PM |
“Could you tell me why in the same year the method changed from cash to accrual basis, government expenditure saw a 35% increase from the previous fiscal year.”
Brian, you have identified precisely the reason for the sudden jump in reported expenditure: the change over from the cash basis to the accrual system. The application of the accrual method would no longer allow the non-reporting or deferment of known or recognized liabilities to be settled or paid in the future and then reported. The debt must still to be paid and recorded or to use “accrual speak “, recorded and then paid.
You could probably use the accounting analogy of changing the method of depreciating a fixed asset during its useful life. The amount of the periodic depreciation expense and accumulated depreciation would change either up or down depending on the method employed but the market realizable value of the asset remains the same.
What you should seek to explain to us non-economist and armchair accountants here on BU is the subsequent increases in the current account deficit from 2008/09 to 2012/13.
We would allow for the nominal increases due to inflationary price movements even in an economy beset by so called recession. But you need to focus on the effects of the significant increases in interest expense as a result of the associated massive increases in debt to pay for current expenditures.
We await your response and appreciate your warning not to engage in name calling or ad hominem.
I highlighted the change because the way in which the article was written, it would seem that that government expenditure ballooned under and because of the DLP administration.
I already said i’m not an economist nor an accountant. But I was hoping that a real economist would say what was the primary cause for 35% increase in government expenditure in the 2008/09 fiscal year.
I also sent a message to the author of the article to find out how much of an impact this would have on the figures.
@miller
You said the current account balance increased from 08/09 to 12/13. Where did you get your figures from? I’m only seeing up to 2010 on central bank website and they show a decrease in the current account deficit from 2008 to 2010.
Brian, a part of it is the change in accounting method. the government moved from cash to accrual accounting, and a number of off budget entities were brought on budget.
the deficit is too high, but if we debate it in a political context we should also say that part of the reason it is higher is because more itens are now on budget that pre 2008.
@ Brian | February 12, 2013 at 10:36 AM |
What are you saying here, Brain?
Are you stating that the fiscal deficit both on the c/a and overall has been the same or reducing since 2008/09?
If so why has the national debt moved by almost $2 billion since the DLP came to office? Why borrow from the NIS to pay salaries and to meet transfer obligations to the statutory bodies like the TB?
@ Trained Economist | February 12, 2013 at 10:51 AM |
Sorry Trained Economist, but we cannot debate the fiscal deficit in a political context by reference to any change in any public finance accounting methodology.
Off budget financing in previous periods (pre 2008- to use your implied phrase) would only have an impact in the year the method of accounting for public expenditures was changed. Future year increases in expenditures cannot be hinged on the book-keeping adjustment or reconfiguration that took place in any previous year whether in 2007/08 or 2008/09.
The problem is that the government has been spending on current account (including transfers to statutory and other non-central government bodies) more than it has been earning in revenues. This situation has been ably pointed out by Ryan Straughn; unless you want to say he is talking nonsense, technical or otherwise.
Bring back Owen and the forty thieves quickly.
The majority of Barbadians don’t know anything about economics, all the working class people, and those not working is how to get along day by day, to feed their families, to send their children to school, and to pay the rent, don’t even talk about the electric bill & water bill, which we have to juggle. So don’t feed all these figures to us, just help us, so we can meet our needs on a daily basis. The DEMS has made a mockery of our taxes, we want some one in there who can ease our situation, and take this little country forward to prosperity again. Things are really ” dred ” . No one even seem to be thinking of pensioners, we certainly need help, and if OAS can help us we going with him.