EDITORIAL: Time to tighten our belts!

THERE are many people in Jamaica, Trinidad and Tobago and other places across the region who believe that Barbadians do not know just what austerity is about when it comes to economic resuscitation.

Judging by what they have experienced in their own environment, it leaves them to conclude that people in this country have not seen or experienced the bitter economic medicine that other nations have gone through as they seek to correct serious economic shortcomings. Measures in place since 2010 to correct the economic ills here do not compare to what we have read about taking place in other jurisdictions which have also had their economic challenges. That line of thinking therefore seems to indicate that people in this country have not fully grasped the magnitude of the issues facing the economy and the tough programmes that are necessary to bring the country out of the hole it is in.

These points came to mind last Thursday night at a function addressed by Honourable Donville Inniss, the Minister of Industry, International Business, Commerce and Small Business Development. The Minister lamented how he has seen too many Bajans who realise things are tight or getting so, but still cannot miss the annual shopping trips overseas. He went further by saying that too many who ought to invest in their kids’ future education prefer instead to change their four-year-old car even if the loan repayments are 11 per cent for five years.

While the point about going overseas to shop is well taken, the reaction from those who have travelled for such purposes is that what they have spent abroad is significantly lower than if the money was spent on items available in this country, even taking into consideration the cost of airfare. According to them, it is now cheaper to travel from Barbados to Miami/New York than it is to go from Barbados to Jamaica or even to Antigua or other places in the Caribbean.

However, in recent times a lot of comments along the lines made by the Minister have been making the rounds. Former Governor of the Central Bank of Barbados, Dr. Delisle Worrell has said that people are living beyond their means. Some economists, including those at the highest level, believe so as well and have been calling for some dampening of demand in the economy because the country is not earning enough hard currency to accommodate the kinds of consumption being witnessed.

Few see no problem with this since they say, and rightfully so, that consumption helps to boost economic growth which would be somewhat tricky because the island’s foreign exchange earning sectors are not performing up to full marks. There appears to be a consensus that if the Government does not take action then the current situation of debt levels, fiscal position, and dwindling foreign exchange reserves will deteriorate and thereby make Barbados a candidate that will be seeking an accommodation with the International Monetary Fund. If that happens then the measures that have to be pursued to secure financing from the Fund will be very harsh.

Measures traditionally associated with economic rescue and recovery programmes are not easy. No one wants this for Barbados but we have to be prepared to indulge in some belt tightening if we are to recover.