The commitments given and targets set by the Barbados Government for the medium term strongly suggest that the stimulus option is just not a viable one.
We are committed to removal of fiscal deficits (currently about 8% of GDP) by 2014/15 and a 30% lower debt to GDP ratio by 2017/18. These are very stretch targets. Achieving them means a massive reduction in public sector expenditure and a focus on entrepreneurship driven growth strategies.
The International Rating Agencies, the International Lending Agencies and Capital Markets will keep a very close eye on how we meet our commitments. Barbados has a good reputation, earned over decades, for being trustworthy. Trust, once broken, is difficult to regain.
We are a part of a global economic and financial system that severely punishes reckless behaviours.
A downgrade of our credit rating will be costly and will hurt the Barbados quality brand that is so vital to our global business aspirations.
For the economy to grow we are going to have to work much harder and smarter, do more with less, become really competitive, cut wastage and export much more.
Don’t expect economic conditions of the last decade to return anytime soon. An economic paradigm shift has occurred. We must adjust our strategies to match the new economic realities. Demand patterns for our primary exports in our traditional markets has changed the game.
We are now entering an age of austerity as is the case in the USA and UK.
Its time for a reality check and a taking of stock.
In any event if stimulus was an available option would taking that path deliver what we really need? I do not think so.
Although we are faced with a difficult global recessionary environment much of our problem is self-inflicted.
We must now focus on fixing what we know to be broken and over which we have control.
Pouring more water into a leaking bucket is a very bad idea. We must repair the bucket or better still invent a much better one.
Leadership of the highest order at all levels in all sectors is paramount. We all share part of the blame for the quicksand in which we find ourselves.
Issues about trust and respect between key stakeholders must be openly addressed. We need to stop the finger pointing and agree to hold hands instead. We all need to look in the mirror.
This will require integrity and openness. It will require honest communications to the public. Tell them the truth. Barbadians are smart and will respond to good common sense leadership.
We can’t expect our politicians to do the right things if we reward them for doing the wrong things to please our short term selfish needs.
What we need is a call to action. How many more discussions,reports,papers,committees and sub-committees must we accumulate before we act? We have been talking about the same problems for 20 years.
Why is getting a Town Planning approval so difficult, and registering a professional practice so tiresome, or getting a drivers license so inconvenient or getting a work permit so traumatic, or repairing Joe’s River bridge so inefficient and costly.Why aren’t current audited financial statements for the National Insurance Scheme available? Why has no decision been made to address the CLICO situation?
The list goes on and on ! Stimulus can’t help any of these to change.
All of this we can fix quickly if we had the will and someone was held accountable.
Some actions we can tackle immediately include:
- making strategic decisions on agriculture
- disposing of all loss making Government run enterprises(e.g.Gems);
- disposal of the massive inventory of under-utilised and costly Government owned property;
- privatization of many Government services;
- determine priorities and cut what is non-essential in Government budgets. Re-allocate fiscal and human resources to those priority areas.These should include protecting the poor, maintaining the infrastructure and rapidly improving business facilitation for entrepreneurs.
- A culture of prudence and tight expenditure management is now essential for Government to set the example. Less lavish expenditures-economy travel, modest hotels, smaller cars and less incentives for Government employees to go the next overseas meeting. Stay home and fix the problems, answer letters, return phone calls.
- improve productivity(who is really producing in Barbados today?). You just need to take a look around to see the lethargy and lack of urgency in much of the workforce. Management has the responsibility to provide the environment for people to perform to their optimum.
- Empowerment-give professional managers in the Civil Service the power to make change and hold them accountable for their performance. Why should Civil Servants be protected from market realities when everyone else is not? Makes no sense at all and severely retards progress in every sphere of economic activity. We must have performance targets and real accountability.
- unleash the entrepreneurial passion of Barbadians by providing appropriate resources-financial,mentoring and business facilitation are key elements. The Banking Sector must help provide the funding needed at this critical time. A $20 million per annum injection for the 5 years can create many new export-oriented enterprises-the mechanism is in place to receive and disburse these funds professionally;
- Cut costs of doing business in Barbados. Less bureaucracy across the board.
- fast track foreign direct investment by finding foreign entrepreneurs in the appropriate strategic industries and with the skills and invite them to relocate to Barbados with their families to partner with local entrepreneurs. This will bring ideas, new capital, skills and external markets access which we urgently need. Jobs and foreign exchange will be created.
- identify where jobs are most threatened in our productive sectors(e.g.in which hotels) and devise strategies to mitigate job losses in each such as risk enterprise. Maintaining high employment levels is essential to social stability;
- effectively utilise the talents of the entire community and diaspora to provide solutions.
We only have ourselves to blame if we miss the opportunity this crisis affords us. This is a crisis we cannot afford to waste.
Lets stimulate our action button.
Peter N.Boos FCA