Downgrade or not, the Barbados Economy is in Serious Trouble – Henderson Bovell Assessment

What can you say about a Government that promised to balance the budget and run a small deficit at the same time? A Government, which promises to reduce the cost of living but increases taxes or a Government that, says that it has a strategy to reduce the national debt but keeps borrowing more, simply to pay day-to-day bills?

The DLP is a Government that promised a ‘pathway to progress,’ but under its watch – the economy has been in recession for more than three consecutive years. We certainly do not need Moody’s or Standard & Poor’s to tell us that! What we also know is that – faced with the same global financial conditions the DLP likes to complain about – the Guyana economy NEVER once went into recession.

Fmr. Chairman of the National Assistance Board, Henderson N. Bovell - weighing on the Moody's Vs. Standard & Poor debacle

All along, the DLP was blaming the global financial crisis for its dangerous mismanagement of the Barbados economy but now that it has been pointed-out that the global financial crisis ended some time ago, and that of 213 countries in the world, 188 were ahead of Barbados and about 110 actually expanded their economies – the DLP has shifted to a new whipping horse. Having shifted the goalpost again, the DLP now alleges that rising oil price is now to blame.

Mind you, oil prices fell and remained low for quite some time but only began to rise again when the unrest started in the Middle East and Northern Africa. That the DLP is bellyaching about the price of a barrel of oil and the pressure caused on the balance of payment – simply means that Barbados (under DLP rule) has a foreign exchange problem.

So, why would the DLP be surprise by the recent Moody’s downgrade when Foreign Direct Investment (FDI) is down and has been for the past three years (due in part) to a lack of investor confidence? What would you expect if tourism numbers are alleged to be up but spend is down significantly? No one is gloating but is Barbados grinding to a halt under DLP rule? At least now it should be obvious to all, that Barbados has a Government it can no longer trust and afford. And, if Barbadians are saying that the DLP does not know what it is doing – then the DLP has itself to blame.

Despite the promise that it will not steal, cheat or lie and despite the promise of freedom of information – were it not for Moody’s – Barbadians would have no independent idea of the disastrous state of the Barbados economy and of our public finances.

Whereas the recent Standard & Poor’s Report would obviously give comfort to a DLP Government (now under pressure and desperate for a success story) the Moody’s report has certainly caused the entire country to sit up and take note. The point is – whether you read the Moody’s or S&P Report, the bottom-line is that the Barbados economy is in serious trouble. Standard & Poor’s has merely opted to: “wait and see,” before it too downgrades.

But, judging from what our public officials are saying in response to Moody’s downgrade, they do not seem concerned about Barbados being asked to pay interest rates of 15% and up – on future borrowing, despite the US; the UK and Japan having interest rates of either less-than-one percent (0.5%) or one per cent (1%).

The truth is, the DLP spending substantially more than it has, for the past three years – is totally unacceptable and many would even consider such behaviour – fiscal recklessness, especially when such over-spending neither stabilises nor stimulates the economy. So, the DLP taxes and spends substantially more than it has – gets it wrong yet again and punishes Barbadians with even higher taxes and increased fees.

Now that Moody’s has spoken, what should therefore shock Barbadians – is the allegation of growth of some 2.5% given that the DLP was complaining all along about a global financial crisis and saying that it can only show growth in Barbados if there is growth in America, Britain and Canada.

Barbadians should demand a public inquiry and or an explanation of that alleged growth; what are the drivers of such, and whether it is sustainable. Still, the country now knows that it has to take what the DLP says with a pinch of salt.

The DLP alleges that it is on top of things and that paper being offered by the Government is being over-subscribed. I think the verb should be: “WAS,” to reflect a period before the free fall started and before Moody’s sounded the alarm.

No one is gloating but the one thing we all know for sure – is that it is now extremely bad under DLP rule and that things will get even worse in the next 18 months, once the DLP remains in office. The question Barbadians will therefore need to answer is whether they are prepared to put-up with more DLP time-wasting; excuses and unnecessary pain, especially when it is crystal clear that the DLP is the major part of the problem Barbados now faces. The DLP is simply a Government that Barbadians no longer trust and can no longer afford.

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