In support of stricken Barbados
If only out of enlightened self-interest, Trinidad and Tobago should, at this time, share supportive sentiments for the economic tribulations of the people in the bedrock Caricom state of Barbados.
Far from blithely looking forward to any bright and prosperous New Year, Barbados is braced for so severe a period of belt-tightening as to challenge the island’s famous reputation of proud self-reliance and resilient self-confidence. Since the world economic downturn in 2008, Barbados has been buffeted by adverse economic winds. Tourism, its key industry, has taken a beating as travellers from North America and Europe have cut vacations to the sunny Caribbean from their personal budgets.
Although in recent years the Bajan economy has diversified into light industry and offshore financial services, with this latter generating earnings second only to tourism, these sectors have also been severely affected by the global recession. As a result, the Barbados economy had contracted by four per cent in 2009 and then grew by less than one per cent per annum. Unsurprisingly, Barbados’ public debt-to-GDP ratio rose from 56 percent in 2008 to over 75 per cent now.
Bajan Prime Minister Freundel Stuart has therefore had no choice but to bite hard on the fiscal bullet. Mr Stuart has already raised the spectre of substantial public sector job layoffs, with the International Monetary Fund (IMF) recommending 3,000 job cuts. That represents almost 10 per cent of civil servants being thrown on the bread-line.
But, if this is not done (and perhaps even if it is) the Stuart administration may have to devalue the Barbados dollar, which at present under Barbados’ fixed exchange rate system stands at US$1 to B$2, as compared to T&T’s nominal floating rate which hovers around US$1 to TT$6.30.
In Barbados, devaluation talk is virtually sacrilege, and the choice that the ruling Democratic Labour Party makes will be strongly influenced by calculations of the lesser of two political backlashes.
Inside and outside the country, nobody can predict the outcome of such austerity measures, in a place that has been a relative model of tranquil stability. While that is unlikely to change in any overt political sense, the underbelly of criminal activity may well become chronic, to the extent where parlous economic straits could see a rise in burglaries, robberies, and drug trafficking.
The T&T business sector has more than a passing interest in all this, since this country buys over 21 per cent of Barbados’ exports, while 38 per cent of Bajan imports come from here. So, in whatever way it can, T&T should stand ready to give backing in its coming hours of need to a Barbados that has been a solid economic ally, trading partner, and with which unbreakable historical ties remain.