EDITORIAL: Barbados’ Growth Strategy takes shape

MUCH continues to be said about the need for an economic growth strategy for Barbados and whether in the prevailing circumstances the economy will realise growth this year. The strategy, which the Government is undertaking, involves increased Construction activity, and the opening of the Ross University School of Medicine, along with the projected improvements in tourism.

These are three key pillars the Government expects to see economic growth materialising. Both the Central Bank of Barbados and the Caribbean Development Bank predict that growth this year will be somewhat flat unless Government can do the necessary things to give the economy that much required boost.

Later this week Prime Minister, the Honourable Mia Amor Mottley, will participate in a ground-breaking ceremony for a Sagicor Financial Corporation financed project in St. George, following on from a similar involvement in the Kooyman project at Kendall Hill, Christ Church a week ago.

These are worthy initiatives which once these projects pick up full steam, along with some smaller construction activities and Government spending on capital projects, they ought to be enough to spur some major contribution from construction.

However, there is another side to the growth equation where a period of austerity is still with the country and which will be so for some time once Government sticks to its Barbados Economic Recovery and Transformation (BERT) programme in trying to stabilise the situation in Barbados.

Last week the Caribbean Development Bank, in its “Country Economy Review 2018”, stated that the above-mentioned programmes “will more than offset the expected drag on economic activity related to the commencement of the next phase of BERT and the continuation of fiscal austerity measures”. The Bank stated that if the planned private sector projects materialise in the first half of 2019, growth is likely to be positive.

The significance of BERT and austerity having a drag on the economy cannot be ignored, especially how severe these factors can be. This next phase of BERT will most likely be unfolded on Wednesday when the Budget is presented, and what will be the level of expenditure cuts as these are anticipated going into the next financial year. Commentators continue to speak about the primary balance which, according to the Barbados-International Monetary Fund (IMF) agreement, is targeted at six per cent in the following financial year, starting in about two weeks’ time. This appears to be a very dreaded figure and when considered that it has to be achieved for a sustained period, then that makes it even more worrying.

So the bottom line here is that what is expected to happen during the next phase of BERT could erode whatever gains the growth strategy makes, leaving the island back to square one. One Economist has ventured to suggest that it is not possible for Barbados to be pursuing a programme with the IMF and achieving economic growth at the same time.

It is agreed by all and sundry that economic growth is necessary to lift the Barbados economy out of the current recession. Such will allow the country to battle the reduction in the debt to GDP ratio, earn foreign exchange (depending on which sector is fuelling that growth) and provide jobs for its citizens.

It is something that all Barbadians will want for their country.

Barbados Advocate

Mailing Address:
Advocate Publishers (2000) Inc
Fontabelle, St. Michael, Barbados

Phone: (246) 467-2000
Fax: (246) 434-2020 / (246) 434-1000