There is an absence of leadership in the Barbados economy.

We face two problems – we cannot pay our bills as a Government and our productive sectors are not earning foreign exchange.

It is compounded by the fact that the Government has not put any credible plan in place to deal with either of these two problems.

Courtesy BLP's blog

Courtesy BLP's blog

With respect to the first, Barbados, for the first time in its history has had three consecutive years of a fiscal current account deficit. Bajans need to understand what this is. It is being able to pay your basic monthly bills – wages and salaries, goods and services. It is not the big projects – it is the day-to-day expenses. The Governor of the Central Bank’s report shows that for the first 5 months of this year, we spent $182.3 million more than we earned in revenue.

Why this is disturbing is that it is $62 million more than the deficit for the entire year of 2008 when we were already saying things were bad. Yet the Government claims that it has been holding to its Medium Term Fiscal Strategy. The truth is that that strategy is premised on revenue coming from the World Bank and CDB in this financial year to the tune of $140 million. That has not come and the Government is not saying if it will.

Further, it states that the overall fiscal deficit this year should be no more than 7.4%. Yet, the half-year position reflects a deficit already at 8.6% at the end of May 2010.

This means that the Government is making little headway in increasing its revenue and cutting its expenditure – hence the $182.3 million deficit at the end of 5 months.

Not a word from the Government. We have a Minister of State in the Ministry of Finance who spoke at a function of Inland Revenue this week and not a word from him on Government’s continuing poor revenue position. The revenue is down in the first six months of this year by $101 million from what they received last year for the same period. Corporation taxes are down by 29% or $80 million lower.

Why is Minister Boyce or the Acting Prime Minister not addressing these issues?

Barbadian businesses providing the goods and services are running from pillar to post to be paid. People relying on Government for support are waiting longer and longer to receive it. They now know why.

On the second clearly emerging problem, the productive sectors are still not earning foreign exchange.

Our reserves have dropped in spite of the borrowings of the last year. Clyde Mascoll has already addressed the fact that the decline in the Net International Reserves is really $268 million and not $68 million. What is also clear is that even tourism where they are trumpeting a 2.7% increase in arrivals has seen a substantial drop in spend, and consequently Government’s revenue. Sugar is down. Manufacturing is down. International business registrations and receipts are down. And there is no plan from the Government for their recovery.

We are standing in the middle of the road with an 18-wheeler truck bearing down on us. And the two Ministers of Finance – Boyce and Stuart – are standing idly by without a word.

Barbados needs a Budget like yesterday. And the Budget must set out for the country a Short Term Economic Recovery Plan while laying the basis for restructuring in the Medium Term.

A cut here and a cut there will not help any household or business in this country see their way forward. We need to restructure both Government’s operations and the productive sectors urgently.

The economic situation is bad but the failure of the Government to respond, to intervene and to lead is tragic. That is our biggest problem – absence of leadership.

There is nothing wrong with the Barbados economy that strong leadership and sound policy direction cannot fix. The strong leadership must be to identify the solutions and taking the country into your confidence so that a national consensus can be reached.

Sir Arthur Lewis in his Second Annual Report as President of the CDB in 1973 stated that for bold policies to be accepted they must be understood and they can only be understood if they are discussed.

Silence, Mr. Boyce and Mr. Stuart, may be golden but not in this case. Silence is not discussion. Come to the people and lead and let us get on with the business of bringing our households and our businesses back from the brink.

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