|??Minister of Finance and Economic Affairs, Chris Sinckler, (right) congratulates Chief Executive Officer, Ian Carrington following a ceremony to bless the??new Headquarters of the Financial Services Commission at Warrens. (C. Pitt/BGIS)|
If this country is to emerge from the current economic climate, then the Barbados economy will have to be restructured.
So says Minister of Finance and Economic Affairs, Chris Sinckler, while giving remarks at a ceremony to bless the new headquarters of the Financial Services Commission today in Warrens.
Referring to last?? Monday’s reported lowering of the country’s economic outlook by Standard and Poor’s from ???stable’ to ???negative’, Mr. Sinckler reiterated that government could not afford to move off the track of its fiscal programme.
He said: "What Standard and Poor’s or the International Monetary Fund or the Central Bank of Barbados even have said and will continue to say is not new. This is what I have been saying for months now, at least for more than a year, since I made my first budgetary presentation that we have to run a tight ship.
"We have to consolidate our fiscal accounts, eliminate wastage, boost efficiencies in the public service, ensure that we continue to restrain the growth of wages in the public service, continue to strengthen our social safety net, and we have to continue to ensure that the most vulnerable among us are not left behind. But most of all, we have to ensure that as Barbadians we stick together as team Barbados and work on this project."
Giving an analysis of the performance of the Barbados economy so far, he disclosed that a deficit of 5.2 per cent was now being projected, with the medium-term fiscal strategy calling for it to go to 5.6 per cent.
"We can better that this year. And we will do everything possible to achieve that effort.
But on the other side, we cannot over-compensate by raising more taxes, thereby cutting demand to an extent where it cannot contribute to the growth in the economy. Nor can we cut expenditure so wildly and so deeply as to cause hundreds or potentially thousands of Barbadians to be on the breadline or to decimate government’s ability to participate in the economy," he stressed.
The Finance Minister noted that government was cognisant that Barbadians were "hurting" because of certain fiscal policies taken such as imposing taxes on travel and entertainment allowances increasing the value added tax and other measures.
However, Mr. Sinckler added: "But we did not take those measures because we wanted to just impose hardships on the population. We wanted to ensure that we could continue to provide quality services for Barbadians, while achieving our objectives of reducing our fiscal deficit and bringing our debt levels down from the highs that they are. And one interplays with the other."
He continued:?? "We will not bring our debt down sustainably if we don’t get our fiscal deficit down. Those are the realities of economic governance in Barbados. There is no special way in which to do these things. There is no magic bullet or magic wand that can be waved to achieve these results. It is going to be done by hard work, stick-to-it-ness, and a clear recognition of the need to be disciplined in the way in which we manage the public finances."
Pointing to the global economic outlook, the Finance Minister observed that the world was not changing for the better, but rather for the worse in the short term.
"We know the problems in Europe. They are on the precipice of a major debt crisis and a potential collapse. We know that the United States, for example, yesterday had to revise its growth figures downwards for the third quarter and with an election coming up potentially it will have to revise those [figures] down again.??"We know that the British economy, for example, had to downgrade, move down their expectations just as we had to do for the year coming out of the first half of 2011.
He explained that most of the private sector companies relied on government contracts and government business in order to survive. And, he pointed out: "If we do like … Britain where there are now revising their own policy because they believe they went a bit too far in the first place. Or, in Greece where the pro-cyclical policies implemented have been so dramatic as to devastate the very economy of Greece to the extent that it cannot achieve any targets at all which have been set. If we do that in a small, open economy like Barbados, trust me, it is going to be for the worse."
Mr. Sinckler promised that government would continue to respond to the economic situation by continuing to operate "a tight ship".