A statement last week by Governor of the Central Bank of Barbados, Dr DeLisle Worrell, indicates a certain optimism on the part of the authorities about the future of a Barbados economy which had barely indicated growth over almost a decade.
The Governor has himself come under continual criticism in the country for indicating a degree of optimism about future economic growth prospects. But he sought last week to assure Barbadians in New York that on the basis of central bank data, the economy is estimated to have grown by 0.5% in 2015, largely on the basis of a 5% growth in receipts from the country’s major economic activity, tourism, a best performance since the country went into economic recession in 2007-8. And in support of this, he indicated that unemployment had slightly decreased from 12.3% in 2014, to 11.8% in 2015.
The Governor’s positive picture was reinforced by indications that the reserves of the country appear to be moving towards stabilisation, based partly on the now well-known recommendation by the international financial authorities, of divestment of public sector companies and financial institutions.
With general elections, last held in February 2013, due two years from now, Prime Minister Freundel Stuart and his government seem to be indicating that the strategies undertaken by themselves pursuant to the onset of economic recession, have been justified, based, in the words of Dr Worrell, on an economy now “second only to Panama in overall competitiveness in our region”.
Governor Worrell has, however, been cautious in reminding the Barbadian public of the extent of the acknowledged dependence of the substantial tourism sector of the country on the major Western economies, themselves subject to periodic economic changes. For, in that connection, the Barbados government and the industry have recognized in recent times, “a moderation in the duration” of tourist stays, and their “skipping of more luxurious restaurants” in response to the falls in the currencies of both Canada and the United Kingdom”.
Nonetheless, and in this connection, Governor Worrell re-emphasised, during his New York visit, a favourite theme of both the Barbados government and himself since the onset of the Barbados recession, this being a rejection of the devaluation of the Barbados dollar. This posture, of course, has gone against the grain of policy in Barbados’ MDC colleague countries which are also tourism states, in particular Jamaica. But it seems to have now become a posture supported by others in Barbados.
The Government of Barbados has, to some extent, had some breathing space in implementing its policy, since it has seemed to assume that there is not a substantial demand from the voting public to select the opposition at this time, and this for at least two reasons. First, there would indeed seem to be a sentiment that the Barbados Labour Party, having changed its leadership from the experienced Owen Arthur to Mia Mottley, and having had some challenges to consolidation from within, is not yet a stable competitor for leadership of the country. Owen Arthur would appear to have abandoned positive commitment to the party, and Ms Mottley has had some difficulty in holding together a cohesive party, definitively loyal to her leadership.
It would appear to be in that context that the DLP, the party of an Errol Barrow not always so definitively inclined, has felt it possible to implement policies of a rigidity associated with the IMF, though not having sought such a mandate. For Prime Minister Stuart would appear to have come to the conclusion that neither his party, nor the DLP, as government, could take the chance of a continued deterioration in the economic situation and confront the electorate for renewal of its mandate two years from now.
Further it seems to have been the case that Governor Worrell, well knowledgeable about the extent of governmental temporizing that took place in Jamaica when that country’s economy started to deteriorate in the late 1970s into the 1980s, obviously sought to persuade the Barbados government that more or less voluntary action now, was preferable to enforced action later.
Given the political balance at the last election of February 2013, it cannot be said that the electorate definitively favoured either party, the difference having been two seats. The current BLP, with Owen Arthur sitting in the wings, hardly seems to be able to mount an effective platform of persuasion based on the view that any alternative economic policy would have been successful, or less painful, than the DLP government’s policy has been. And it would, furthermore, have been hard to go against the grain of opinion held by the central bank, unless Governor Worrell was felt to be an acceptable casualty.
No doubt, with elections due as far away as two years, it seems that there will, in any case, be enough time for the Barbadian electorate to decide on whether the DLP government was correct in subordinating itself to IMF-style strictures, the extended example of Jamaica’s initial objection to the IMF’s recommendations in the late 1970s, still being very visible.
