BRIDGETOWN, Barbados (CMC) – Government and Opposition legislators as expected differed on the state of the Barbados economy as they began debating the 2017-18 Estimates of Revenue and Expenditure on Monday.
Finance and Economic Affairs Ministers Chris Sinckler who led off the debate acknowledged that the Freundel Stuart government may have adopted a wrong policy in getting the Central Bank to print money and said it must be “brought to a halt as soon as is practical”.
“It is not a sustainable policy, it doesn’t work well, it doesn’t look good, it doesn’t smell good,
it is not good,” he told legislators, noting that the Central Bank provided financial support to the tune of BDS$714.5 million (One BDS dollar
=US$0.50 cents) at the end of December 2016 to help finance the underlying deficit and to cover a shortfall arising from the refinancing of
maturing debt.Sinckler said that the government had little choice but to resort to the Central Bank to avert chaos in the local
economy and that it was prepared to stand guilty as charged. “If the price of saving lives and livelihoods is a downgrade from Moody’s or a
bad report from S&P . . . if that is the price that we have had to pay to protect ordinary citizens from the worst ravages of this recession it is a
price we willingly accept as a government,” he told Parliament, noting that the government has had
to endure the attacks of an “abusive Opposition and the wrath of economic terrorists” called rating agencies.
“However wrong some may say it was, we did what we feel was in the best
lnterest of the poor, powerless, the vulnerable in this society,” he maintained.
Sinckler made it clear to legislators that the Central Bank did not print money at
his request, explaining that the financial institution in consultation with the
Ministry of Finance has a cash flow committee, which meets to analyse the
country’s cash requirement and determine what level of support the bank would
have to provide in the event of a shortfall.
“They don’t wait on any call from the Minister of Finance to any Governor of the
Central Bank or anybody that’s working in there. It doesn’t happen that way, I
have never called any Governor of the Central Bank or anybody in the Central Bank to tell them – look, print money,” Sinckler told legislators.
He also snubbed calls for Government to impose fiscal rules to prevent the Central Bank from financing Government expenditure saying experts from the
Caribbean Regional Technical Assistance Centre (CARTAC) and the International Monetary Fund (IMF), which recently advised Cabinet on the matter strongly advised against the move.
“One thing the expert said to us is to get your structures in the economy right first, do the thing that is required first before you put any laws in place, because you are going to put the laws in place and then end up having to change them.”
But he acknowledged that Government was “borrowing too much money from the Central Bank” and it had to face up to the issue.
He said a major target of this year’s estimates was a reduction of the fiscal deficit from 5.1 per cent to 4.4 per cent of the Gross Domestic Product (GDP).
“We still think that 4.4 [per cent] is too high. We need to bring it down further so that it is financeable but we need to do it in a responsible way that does not unravel the entire society and we are going to be meeting with all groups in the society and interested persons and work it out how we can get to the stage of phasing out Central Bank lending.”
But in her rebuttal Opposition Leader Mia Mottley said Sinckler in his contribution had all but admitted that “the economy is in deep economic difficulties”.
She said his six-hour presentation revealed an “absolute failure by the Minister of Finance”, and recalled a 2010 debate on a motion of no confidence in the government that Sinckler had denied all of the economic difficulties, which he was now owning up to.
She said also that on the eve of the 2013 general election, the Finance and Economic Affairs Minister had “joined in chorus to say there will be no sell-off. There shall be no charging of [university] fees. And there will be no layoffs in the public sector.
“I have never seen estimates as poorly prepared as these. When you go through it you will see explanatory notes from last year, programmes being explained for last year that don’t exist in this current year,” the Opposition Leader said, asking: “A Cabinet really presided over this?”
“I am not going to dignify and legitimise this exercise. I want us to deal with the strategic issues that face this country,” Mottley added.
“The only option left is to give the people of this country the right to decide and determine their fate at this point.
“You can’t say that we are at that point and then deny the right of the people to have a say in the quality of life and the type of life that they want in this country,” she said, adding that the life of the current Parliament expires in 51 weeks.