Risky move

Stop putting all of our eggs in the tourism basket!

This was the advice coming from the People’s Party for Democracy and Development (PdP) spokesman on economic affairs, Bruce Hennis, as he chided government’s decision to place heavy emphasis and therefore significant debt in trying to regain vital foreign exchange mainly through the tourism sector.

Speaking to the media during the Opposition party’s conference yesterday, he highlighted government’s intention to inject $2 billion dollars into the economy over the next two years, noting the majority of these funds were going into hotel related construction.

‘No direction’
“At least 64 per cent of those funds are being directly invested in tourism related projects and capital works. While these are critical things, we have a problem in that we do not have strategic direction coming from the jobs and investment advisory council which has been set up, because they have only had initial meetings so we are charging ahead with a programme without direction and committed to over $1 billion.

“In terms of tourism, the world’s second largest tourism market in terms of expenditure – the United States – has taken a beating out of this world with their own economy, and so we are therefore hoping that things would turn around this year, but they might not and probably will not,” Hennis stated.

Pointing out the demand for air travel was expected to be suppressed for some time, he therefore stressed that stimulus must be more broad based.

“We have now started to push jobs which is a key thing, but we do not have a vibrant source of foreign exchange revenues to counter that. We are going to run into a problem that has an adverse impact on our foreign exchange reserves once again. We are pushing jobs and will have a high level of employment, but then that money will be on banks overseas,” he said, claiming the country would run into problems similar to those in 2008 which featured “one of our highest negative trade balances”.

Hennis also spoke on the island’s most recent signing of US$90 million loan from the International Monetary Fund.

“It sounds very good, but in light of the fact that most of it is going into tourism, it is something we ought to be cautious about because that extra US$90 million has made Barbados the sole
country carrying the largest debt per person, carrying US$1300 per person, so we have to be careful how we manage our money and where we put our resources,” he argued.
(JMB)