EDITORIAL: Face hard facts about economy

FOR all of the assessments, projections and the performances to date of the Barbados economy, there appears to be some very hard facts which the authorities must come to grips with if the island is to realise growth in 2021 and beyond.

The island is into a programme with the International Monetary Fund (IMF), which is aimed at stabilising the economy, positioning it to grow and in the process bring benefits to Barbadians.

It is well recognised that a growing economy means jobs for people, the promotion of socio-economic policies, earning foreign exchange to pay for the imported goods and services, defend the existing exchange rate, and among other things, repay external debt.

Therefore in the absence of growth, the thought of delivering these goals is going to be difficult, even if there are in excess of two billion dollars’ worth of foreign reserves Barbados has in its possession.

That is why the comments made in another section of the press that Barbados is not earning reserves in the sufficient amount to do the necessary things, remains challenging for the country, and something that has to be tackled.

One of the comments in question made reference to the fact that Barbados has not been earning a sizeable amount of foreign exchange reserves.

Too often this task is achieved mainly through borrowing, the long and short of which has resulted in the build-up of its national debt, which has been dealt by concluding agreements with the IMF and the resulting austere economic measures which traditionally have accompanied those agreements.

Foreign reserves are accumulated through earnings by the export sectors (Tourism, International Business, Manufacturing and Agriculture); borrowing both from private lenders and multilateral institutions; foreign direct investments; grants; and project loans (like what multilateral institutions and trading partners make available to the country).

The more than two billion dollars in reserves have come largely from the IMF, Inter-American Development Bank and the Caribbean Development Bank.

The point has been made for a long time and repeatedly so that Barbados needs to restructure/diversify its economy that would allow the country to expand its ability to earn foreign exchange and to have broad-based economic growth, rather than one sector, that being tourism, accounting for most of it.

This has continued for a long time and the idea of having a fully diversified economy is nothing new to the ears of successive governments in the country.     

This year economic growth is expected to be negligible, assuming there is growth on top of no growth in 2018 and last year.

If it is one lesson that COVID-19 has taught us, it is that it cannot be business as usual going forward. This has been spoken about with respect to several areas in the country, but unfortunately, not in terns of getting the economy right.

Things have to change because they cannot go on forever.

Recessions and the factors which are causing them are happening very often and when they come visiting our shores, our principal export sector tends to fall victim to them, whereas the other sectors fall apart.

For Barbados therefore, if nothing else has inspired the authorities, they must let COVID-19 inspire them to take decisive action on the way forward.