Barbados

‘Economic Situation Worse Than What Has Been Reported,’ Warns Former Barbadian PM

Former Prime Minister Owen Arthur
‘Economic Situation Worse Than What Has Been Reported,’ Warns Former Barbadian PM

Former Prime Minister Owen Arthur says by any measurement today’s Social Partnership consultation on the economy was an abysmal failure for the simple fact that no common ground was achieved on the vexing issue of the National Social Responsibility Levy (NSRL) or the way forward for the economy generally.

Back in May, Minister of Finance Chris Sinckler had announced a $542 million austerity package, which included a hike in the NSRL from two per cent to ten per cent, with a view to wiping out a $537 million deficit.

However, the onerous tax package has been met with strong resistance from both the private sector and trade unions, who continued today to agitate for relief on behalf of their constituents.

While saying he was impressed with the way in which the General Secretary of the Barbados Workers Union Toni Moore forcefully put forward the union’s position during today’s consultation, Arthur, who chaired the Social Partnership for 14 years as Prime Minister from 1994 to 2008, said it was telling that the only commitment given by Government at the end of today’s eight hour consultation with the private sector and the unions, was for more dialogue on the economy.

“We are in a stalemate!” declared Arthur, who also suggested that the talks had amounted to nothing more that “titillating theatre”.

He explained that “a serious social partnership does not have to have a meeting to agree that it should consult.

“[In fact] the only reason why a social partnership exists is that it should be consulted. So that can’t be a serious decision,” he told Barbados TODAY.

In the absence of any firm commitment by Government, Arthur also said it was quite clear to him that the NSRL was not going to be adjusted, despite the demands for relief, from unions in particular.

He also warned that the economic and financial situation facing the Government was far more dire than either Sinckler or the Central Bank was prepared to admit at today’s meeting.

“I believe the reserves are now under $600 million, five hundred and eighty something [million]. That puts a new complexion on it, and if you would recall there were certain things that were supposed to have been there to boost reserves  – the privatization of the BNTCL [Barbados National Terminal Company Limited] and the inflows from certain projects and they are not happening. So the prospects for an increase in the reserves, based upon inflows, is something that you have to put a question mark on again, and so we are in trouble,” Arthur said, while stating that a clear explanation still needed to be given on the severity of the island’s fiscal problems.

“It is a dangerous stalemate,” he stressed, adding that “we now have to open our minds to new thinking because I don’t think we can go ahead just saying that we can’t make any adjustments, because if we don’t make the adjustments, there is a likelihood that this whole thing can come crashing down around our ears.”

Arthur also took issue with the presentation made by Acting Central Bank Governor Cleviston Haynes for the simple fact that a lot of his financial information was only up to June.

“If you are going to make decisions in August that will carry you into the end of the year you need to know what is happening in August and what is going to happen for the next few months of the year when things are hard in Barbados,” he said, while suggesting that one key question was left unanswered.

“The one question that I thought was very pertinent that was not answered was when Ms Moore of the BWU, who I think has now emerged as a serious national leader, asked the minister, ‘could you tell us what is the state of the reserves today?’ And the minister said that you do those things quarterly, but that is not true. If the reserves had improved significantly the minister would have been very happy . . . but I believe the fact is that Government is facing a worse financial and reserves position than has been revealed,” he added.

On the question of the NSRL, Arthur also said the consultation should have asked and answered the question: “Are we in line at least to achieve the objective of that Budget through the social responsibility levy to have no deficit in nine months?”

While suggesting that such would be a massive achievement, he further questioned: “If the policies are not going to achieve their purpose and are counterproductive, what does the Government have in mind to replace it?

“That should have been the update that we should have gotten . . . [but] what is coming across is that the Government is saying, ‘look, we can’t finance our expenditures, but we also do not want to touch our expenditures and in many respects that is more of a political issue having to do with the timing in the electoral cycle than with the real concerns with the Barbados economy,” he added.

Source/Barbados Today

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