Downgrade was expected, says Solutions Barbados official
THE recent downgrade of Barbados by Standard and Poor’s was expected.
This is the view of Grenville Phillips II, the head of Solutions Barbados, one of the parties that will be contesting next year’s general elections.
Speaking to Business Monday on this latest downgrade, Phillips said it was expected simply because the development philosophy the present Government continues to embrace is no longer valid when the country is in an unsustainable debt situation.
He explained that their development philosophy is to finance the country through high taxation. That’s okay as long as you are not in an unsustainable debt situation, Phillips remarked.
However, he is cautioning that if the country continues with that philosophy of the present administration, Barbados is going to face a devaluation of its currency.
The Solutions Barbados leader also pointed to the philosophy of the Barbados Labour Party, stating that it is equally invalid.
“Their development philosophy is to develop Barbados through debt and that too is not valid,” he reasoned.
Phillips said that what he is hearing as an alternative to the present government policies is for Barbados to seek an arrangement with the International Monetary Fund (IMF) where the country will have access to financing. This is another form of debt, he maintained.
He said that his party has been explaining in detail how to get Barbados out of this present situation, referring to the four steps they have been promoting.
The first, according to Phillips, is to increase revenue by reducing taxes to 10 per cent for both corporate and individuals. “That means we will be doing away with the VAT and the National Social Responsibility Levy (NSRL).
“We need additional foreign exchange, but taxes on foreign currency earnings will be zero on the first year and then increased to 2.5 per cent,” he pointed out.
The second aspect is to improve management in the public service in accordance with ISO 9001, a concept that Phillips said was implemented successfully in El Salvador and in other countries.
Other components of their strategy are to address corruption wherever it occurs, and to rid the public service of politics.