Friday, Aug 17, 2018

Former prime minister warns local economy could collapse

Former prime minister warns local economy could collapse
15 May
2018

Former prime minister Owen Arthur Monday warned Barbadians to be prepared for stringent economic policies regardless of which political party emerges victorious in the May 24 general election.

Arthur, speaking at a news conference, told reporters that both the incumbent Democratic Labour Party (DLP) and the main opposition Barbados Labour Party (BLP) would have to implement measures that would stimulate and turn around the ailing economy.

“There are fundamental issues concerning the economy that Barbados has to address. I do not think that people quite appreciate what is the importance of the last report of the Governor of the Central Bank.

“The period January to March is the best period of the year for the Barbados economy in respect of the raising of government revenues and as you know it is the period of the year when we make the most in relation to the earning of foreign exchange,” Arthur, the island’s longest serving prime minister said.

He told reporters the economy had performed “very poorly in those three months, reserves hardly increased…the public finances are still in a state of distress…the government of Barbados owes the National Insurance about BDS$400 million (One Barbados dollar=US$0.50 cents) which it cannot pay, it owes the public large sums of money and there is no immediate for our economy.

“The next government, which ever it is, will assume responsibility for our economy in that time of the year , July, July, August and September, is the worst time of the year for earning foreign exchange and for government expenditures and revenues and if the situation is that bad between January to March, the situation that will confront the next government is going to be dire, immediately so much so that in the first six months the next government of Barbados should concern itself with just stabilising and ensuring that the Barbados economy …does not fall under,” said Arthur, the former leader of the BLP.

He said the government will not be able to “invent an alternative reality…it will have to live with the reality that exists and the situation is bad now in the first six months it is going to be very difficult”.

Arthur, an economist, who announced his retirement from active politics earlier this year, said “any government that wants to be serious…cannot talk in terms of coming into office and taking the people (for a ride).

“You cannot give away what you do not have and unless something is done quickly to stabilise this economy, the Barbados economy is going to go under,” Arthur said, adding “at the center of our economic problem is an economic and financial black hole”.

He said the off-shore sector which has enabled Barbados since independence more than 50 years ago to enjoy a high standard of living prospered until 2008 “because Barbados was in a position up to then to benefit from the fact that it was the only country in the Caribbean to be able to have access to something called exempt surplus provision.

He said Canadian companies based in Barbados doing substantial business paid one per cent taxes in Barbados “and remitted their profits and dividends to Canada without having to pay taxes on those dividends”.

He said Barbados was able to benefit because of the Tax Information Exchange Treaty with Canada.

Arthur said it was important for Barbados to have “an intelligent conversation “about the state of the economy as he dismissed some of the rhetoric that had come from the political platform of the DLP on Sunday night.

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