Notes From a Native Son: Can Prime Minister Stuart Lead Us to the Promised Land?

Hal Austin

Introduction:
It has now become an expected landmark in political analysis, no matter where you are from, that the first 100 days of any new administration are the most important roadmaps to the programme that that administration intends to follow for that parliament. Given that we are now only a few days away from the 100-day point with the Freundel Stuart DLP administration, what objective indicators have we got as to how the administration intends to govern the nation. In other words, cometh the moment, cometh the man: can Stuart be our Moses?  Is he equipped with the vision and tenacity to lead us out of the mire that we have found ourselves in?

New Administration:
For most of the last government prime minister Stuart and his supporters spent most of their time blaming the previous BLP government for the state of the economy, and they were right. The Arthur government spent 14 of the most prosperous years in global economic history and left the Barbados economy with serious current account and deficit problems. But, five years later, it is a poor excuse for finance minister Chris Sinckler and his advisers to continue to blame the BLP administration for the mess they are in.

They have had more than enough time to deal with the problems, more than that, they have had long enough to come up with credible ideas, a workable vision, to take the nation forward in these tough times. So far, there is not a single transparent idea to emerge from the prime minister’s office, the ministry of finance or indeed the central bank. Almost every statement, every speech, every interview they give catches them on the back foot, defending their incompetence and paucity of ideas. Not only that, they have somehow managed to turn every legitimate criticism, no matter how positive, in to a party political issue – to criticise is to be part of the opposition.

Economy Out to the Baller Sir Frank

Sir Frank Alleyne

Minister of Finance Chris Sinckler persuaded parliament last week to raise government’s borrowing limit from 1.75 billion to 2.75 billion. This single act ensures that government can float Treasury Bills and other government securities as the need arises. One may reasonably assume that for the government to have expanded its borrowing capacity it raises the issue of a concern for cash flow. The Minister’s explanation that seeking approval for one billion at one sitting pre-empts the need to return to parliament is ‘interesting’. 

On the international front Barbadians ‘heard’ that Minister of Finance Sinckler and Governor of the Central Bank visited the UK recently to enter the capital market. As recent as 2011 Minister Sinckler publicly expressed a reluctance to accumulate external debt. His preference was for the government to leverage the flexibility of a highly liquid local market. Of late however we have heard that the lack of appetite for government securities has forced government to rethink this strategy.

About protecting the international reserves the government has made this a priority, relatively so. Although an adequate number of weeks imports provide Barbados safe cover, Barbadians must be concerned that shoring up the forex reserves of late required the sale of Republic Bank and Emera shares. 

It is Elementary Dear Watson…stitch in time saves nine

Submitted by Old Onions Bag

Chris Sinckler has promised to revisit the MTFS

How many more pleas must go unanswered? How much longer must we furl deaf ears? It should be a foregone conclusion by now that the present Barbados economy is about to stall, flat line even, if something drastic is not done by the current administration to revive the patient, who being in the ICU for sometime now, will soon be at a point of no return.

Barbados is in need of a stimulus injection to restart commercial activity and encourage consumers to spend. Not a $600 million stimuli towards capital projects and public works that will inevitable once more find its way feeding certain “big guts horse,’ but a package that will see the now sleeping money multiplier re-engaged. What’s the sense in commercial activity staggering while boasting of  lush green pastures of 16 weeks in foreign reserves on the other end?

Capitalism’s Last Gasp!

Complacency begets a crisis, which begets a response, which begets improvement, which begets complacency. And it all starts over again –
Read more

The protracted global economic performance continues to erode the economic gains made by developing countries in the last 25 years. It is evident the capitalist system which has fuelled greed and consumption behaviour worldwide has create an insatiable monster.

The current state of play in the world economy continues to confound our best and brightest. Clearly the economic model which Barbados has developed post Independence is inadequate to sustain our standard of living now and in the future. It is no accident that service based economies continue to lag those which are commodity based.

Central Bank of Barbados: Political Tool or Facilitator of Economic Development?

Submitted by the Mahogany Coconut Think Tank and Watchdog Group

Sir Courtney Blackman, first Governor of the Central Bank

Dr. DeLisle Worrell, present Governor of the Central Bank

We are not a bit surprised that former Governor of the Central Bank, Sir Courtney Blackman is blaming both the Barbados Labour Party and the Democratic Labour Party for the current financial woes. We are also not surprised, that the current Governor, Dr. DeLisle Worrell, is saying that the existing financial sector stymies or does not support innovation and creative enterprises. In layman’s terms it really means, that those citizens with startup enterprises, cannot get them financed.

Government Needs to Protect Small Businesses

Adrian Loveridge – Owner of Peach & Quiet Hotel

Perhaps more than many, I can empathise with individuals who have recently seen their business either fail or brought dangerously close to insolvency. In 47 years it has happened to me twice and in both cases, they were largely external forces which caused near personal financial catastrophe.

Of course, it is easy to attribute the blame to others but in my case, I can unequivocally state that both near failures, which occurred years apart, were largely caused by strike action in the United Kingdom. Both involving the National Union of Seaman. Personally witnessing bus loads, of what can only be described as pickaxe wielding thugs, destroying property and intimidating ordinary people simply wanting to go about everyday work and operating their businesses.

More than a decade later, it was the same union, blockading the English channel ports, which prevented literally thousands of our booked holidaymakers taking their hard earned trips.

Put Up and Shut Up!

Submitted by Napolean Bonaparte

Minister of Finance Chris Sinckler says “we all have to find ways in which to ensure that we adumbrate our ambitions”.

Listening to the call in programs nowadays, one oft can hear much bickering about fraught economic policies and the resulting businesses closures and even homes going up for sale. In one instance, one caller has gone as far as to suggest, that the landlords need to lower their rents and adopt a more lenient and humane attitude towards their tenants’ predicaments.

By the way, have some forgotten that (just as with their situations)landlords have similar financial obligations such as mortgage and maintenance cost to the premises. Besides what is all the harangue and cantanker about? Was it not some of these now philanthropic callers who some eight weeks ago voted (while in a much less belligerent temperament) to retain the status quo? So what is all the noise about? Why then if you were one of those who so aptly fell into that belladonna, you need to put up and shut up!

Notes From a Native Son: Has the Central Bank Failed to Give the Nation Any Direction on Economic Recovery

Hal Austin

Introduction:
The governor of the Central Bank appears quite clearly to have lost all sense of balance as far as the local economy is concerned. Not only has he been in office for the last five years or so, he is yet to come up with a publicly available reasoned and detailed plan for rescuing the nation’s economy from the situation it is in. His recent obvious confusion about the constitutional role of the Central Bank adds further to the confusion. Even local journalists are confused.

Dr Worrell’s reported U-turn on a policy announcement – a veiled criticism of the government, then claiming the government was on track – was but the latest in a series of embarrassing episodes. But first, we must get the legislation right. The Central Bank Act is irrelevant to the new financial architecture post-2007 and the new global regulatory paradigm. I said before, and say again, that the Act needs serious reform, giving the Bank a legally defined role, on par with the Federal Reserve, Bank of England and all the other major Central Banks. Be that role inflation targeting, financial stability, or even more explicitly, managing unemployment rates, there must be a benchmark against which we could measure the Bank. Now we have a situation in which the governor is publicly expressing views about fiscal policy, and one local website even describing the governor/central bank as the government’s primary monetary and fiscal adviser. Not at all. The central bank should be independent of the government of the day and should be reporting direct to parliament.

Review of Barbados’ Economic Performance for the First Quarter of 2013

Related Document:

•  Press Release March 2013 (text)

Notes From a Native Son: Are We Seeing the Beginning of a Chasm Between the Ministry of Finance and the Central Bank?

Hal Austin

Introduction:
We must all offer our congratulations to finance minister Chris Sinckler for having the bravery to change his mind about the management of the economy. One can only imagine the amount of pressure that was on him, mainly from the DLP’s private economic advisers and the central bank governor, to continue down the policy cul de sac of a stubborn rush for growth at the end of which was national destitution and even more street crime. His decision to launch a Bds$600m economic stimulus is brave, and right, even if it has come a little too late. However, it is better to be late than never.

The challenge now for the minister and his senior advisers is how are they going to source this $600m that is now urgently needed and, once it has been found, how is it going to be spent. He must not resort to posturing or rhetoric and doing dodgy arithmetic to arrive at the numbers. Of course, as I am often reminded, the government is not in need of economic advice from me, nor am I offering it; but, instead of borrowing from external agencies, and incurring even more debt, the minister should dig in to the $1.2bn in foreign reserves which is money left idle, similar to old ladies putting their life savings under the mattress. This would be a much better and prudent strategy than robbing future generations of pensioners by taking it from the national insurance scheme.

Notes From a Native Son: When a Government is in Deep Economic Trouble it Should Stop Digging

Hal Austin

Introduction:
In a popular political culture, it is unusual to find any individual or organisation that is evidence-led, impartial, analytical and obsessively objective. The brutal truth is that there is enormous observable evidence that people are getting worse off, that they are finding it more difficult to make ends meet. Yet, to the surprise of most informed observers, politicians, policymakers and the central bank, there is no serious debate over the crisis the nation’s economy is in. The brutal truth is that Barbados imports more than it exports – or earns -, therefore the current account deficit. To overcome that, the nation needs to earn more than it spends; it is simple housekeeping. However, it is good policy to build up short-term debt if the investment would provide growth and jobs in the medium to long-term. When, however, this imprudent spending only adds to the nation’s debt, without any noticeable advantages, this becomes reckless.

The Global Landscape:
Despite the consensus among Barbadian academics and politicians, Barbados has underperformed global economic performance since the end of the Second World War, which has generally ranged between two and three per cent, with the exception of 2009, when it fell for the first time since 1946. Since the 2007/8 crisis, world growth has been driven by China and the Far East, in contrast to the UK economy, based on the eurozone. Further, world growth, along with Chinese demands, have contributed to the high prices in commodities, food, energy, raw materials, which are combining to impose even tougher demands on meagre disposable incomes. According to one major report, in the long-term, the global economy will expand by 3.6 per cent, swelling global GDP to US$90trillion by 2020, in seven years’ time, 40 per cent larger than it is today. This shift will in large be a continuation of the rise of the emerging markets, the report says.

BORROWING to Pay Paul

Prime Minister of St. Lucia Kenny Anthony

A couple couple news items today has given the BU household reason for pause. President of the National Union of Public Workers (NUPW) stated that his union will hold the government to its promise not to engage in privatization that will result in public workers going home. One wonders how any government can guarantee anything in a global market which is challenging for service-based economies. Again, one wonders how the NUPW can be so simplistic in their expectations, we shall see. BU’s disclosure is that we wish no public servant to be sent home to suffer the same fate of thousands in the private sector.

The second news item was that the government of St. Lucia has agreed to pay a 4% wage hike to public servants instead of 6% which dropped from 16%. The punch line came from Prime Minister Kenny Anthony when he explained, “As I have explained before, the returns from VAT are below expectations and will not cover the increase in expenditure. We have no option but to borrow this money”.

What are missing here? At a time governments are borrowing monthly to pay wages yet our governments agree to wage increases and guarantee public sector jobs? Is this an ironclad promise that government will protect public workers until NIS funds run dry. If these economies do not improve what are the options?

Notes From a Native Son: Before Voting, think with your heads and not your hearts

Hal Austin

Introduction:
When the voters of Barbados enter the polling booths on Thursday, it will be an enormous challenge for them to abandon old political tribal loyalties and objectively put the nation, future generations and their own futures before irrationally supporting a party or candidate they have always supported, while suspending reason. The harsh truth is that this is the most testing general election, not only since November 30, 1966, but since the early 1950s and the introduction of internal self-government.

In the new globalised world, there is no turning back for small nation states such as Barbados. New global organisations, such as the World Trade Organisation and the newly re-energised International Monetary Fund, now have power over small states, mostly wrapped up in international treaties, that they have never had before. At the same time, rich and powerful nations are subsidising their farmers and industrialists, such as car manufacturing and farming in the US, farming in the EU, and a long list of state-owned or controlled industries in China, which put further pressure on small states. But we are not just economic people, as a nation we are rounded with equal value given to our social relations, our civic and moral responsibilities and our cultural and creative environment.

Increasing Government Productivity:
One of the biggest drags on growth in Barbados is public sector efficiency, from improvements in technology, competent management to output per person. One only has to read the annual report of the auditor-general to see the extent of public sector incompetence. Take a simple, but important example, uncollected VAT. Value added tax is a sales tax paid by consumers and collected by trades and service people. For convenience, that money is paid to the government at pre-set dates – monthly, quarterly etc. However, in Barbados, there is a huge backlog of payments, of business people failing to handover to government monies collected on its behalf.