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Caribbean Development Bank Analysis of Economy Differs with Central Bank of Barbados

As Figure 1 below shows, CDB’s BMCs have started to recover from the Great Recession, recording positive growth every year since 2011. However growth has consistently lagged behind the rest of the world. Since 2009 BMCs have grown on average 1.2% per year, compared to 3.7% globally, 1.8% in advanced economies, and 3.3% in other…

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Dr. DeLisle Worrell, former Governor of the Central Bank
Dr. Warren Smith, President of CDB

As Figure 1 below shows, CDB’s BMCs have started to recover from the Great Recession, recording positive growth every year since 2011. However growth has consistently lagged behind the rest of the world. Since 2009 BMCs have grown on average 1.2% per year, compared to 3.7% globally, 1.8% in advanced economies, and 3.3% in other small island developing states (SIDS)3 – 2015 Caribbean Development Bank Review and 2016 Forecast

Two years adrift of general elections constitutionally due and the mouthings of politicians suggest election gearing is already in play. This is unfortunate because it means instead of being able to focus on the national priorities to improve the economy AND social wellbeing of the people, the politicians continue to dictate the narrative. This storyline is substance for national debate on its own because underpinning the democratic system as it was intended to work requires full engagement of civil society.

Lost in the current debate of the trivial kind is the crying need for a full blown national discussion about an economic plan crafted to move the country forward.  The modus operandi of this government is to introduce a plan and the citizenry is expected to accept it.  Dissenting positions, feedback, criticism of any government program is always dismissed as being politically motivated.  We can cite several examples, tipping fee, solid waste tax, consolidation tax, increase in VAT, public expenditure read fireworks to celebrate 50th anniversary, the Republican issue, St. John Polyclinic, the change to the law to permit the sitting chief justice to secure the job etc..

Of concern to BU and many Barbadians has been the erosion of the reputation the Central Bank historically enjoyed under this government. Not since the establishment of the Central Bank in 1972 have we experienced what many perceive as that institution becoming politically exposed. Several decisions taken by Governor Delisle Worrell and the Central Bank have been questionable: departing from the protocol by rubbishing the unemployment statistics produced by the Barbados Statistical Service (BSS),  the discontinuation of press involvement in the Economic Quarterly briefings, using politically charged language read repayment of the loan for Dodds prison, releasing funds from the Housing Credit Fund (HCF) to pay Mark Maloney?Grotto invoice.

The release last week of the 2015 Economic Review and forecast for 2016 presented by President Warren Smith and Chief Economist of the Caribbean Development Bank (CDB) makes for interesting contrast to presentations delivered by Dr. Delisle Worrell and the Central Bank.  The sober analysis contained in the CDB report should have informed serious discussion in the media space in Barbados. Much of the analysis, assumptions and forecasts delivered by Smith conflict with Worrell and recent Central Bank Economic reports.

BU is of the certain view a light weight minister of finance is a big part of the problem.

41 responses to “Caribbean Development Bank Analysis of Economy Differs with Central Bank of Barbados”

  1. Heather Avatar
    Heather

    @ David, light weight indeed. No one in the present government seems to understand public finance or economics. Going forward, even if they must be taught to political candidates, that knowledge must be there. We are dealing with square pegs in round holes. Ms. Mcleans’s presence has not been accounted for.

  2. millertheanunnaki Avatar
    millertheanunnaki

    “BU is of the certain view a light weight minister of finance is a big part of the problem.”

    Lightweight MoF? You mean a big stinking liar.

    The eggs of lies told have now hatched and will soon turn into a twin of evil economic garden gnomes called Chucky and Delisle.

  3. Gabriel Avatar
    Gabriel

    The Democratic Labour Party Government,the Judiciary and the legal profession have one thing in common.No one has confidence that they will do what is just and right.They have disgraced the good people of Barbados who were raised to accept and believe that certain institutions will not lie,steal,cheat or mislead the people.A minister of finance who does not think twice of lying in parliament that his life was threatened but in reality does not know the value of a decimal point,is leading the fiscal and monetary policy of a government of scoundrels and JA’s hitherto unknown in Barbados.A junior minister of finance who does not know the difference between a fiscal and a ‘physical’ deficit;nor the difference between an umbilical cord and an ‘unbiblical’ cord.No wonder these are eminent chancellors of the exchequer for the biggest primate himself F J Stuart.Hence the quandary Barbados is in.

  4. NorthernObserver Avatar
    NorthernObserver

    Seriously…who has time to concoct acronyms like D.E.C.I.D.E?
    No news. Barbados has the worst Debt/GDP ratio in the islands; having taken that crown from Jamacia. And average annual growth rates in 2011-2015 of less than 1/2%. Apart from the commodity dependent economies of Suriname and T&T, Bim is at the lowest end of projected CDB growth in 2016.
    But do not fear…..The member from St.Philip north reminded us last week that “our programmes are now beginning to roll out”, and they have finally found somebody [the IADB] who will lend them some chicken feed to …fix de roads and create some short term employment.
    Make no mistake, these less than stellar economic numbers bring joy to other West Indians, who feel Bajans have always been arrogant about their education system and relative intelligence. Now the proof is in….’dem en nah betta dan we’…dem got all the same problems maybe wusser.
    Bajans got money. And Bajan firms are investing, they just are not investing in Barbados.

  5. FearPlay Avatar
    FearPlay

    As uneducated as this cabal of idiots appear to be while speaking and in performance, one still has to be cognizant of the fact that they represent the best of the best capable of running the affairs of Barbados. I say so because a highly educated electorate chose not once but twice to entrust the future of this fair land into their safekeeping. We the electorate have to take full responsibility for what has befallen Barbados.

    Does this statement ring a bell? “I voted for them because I feel they deserve a chance to finis what they started. They didn’t have enough time”. If any of you said this or felt this way after the last election, you can take a bow. You and your ilk are the ones responsible for our plight today.

  6. Artax Avatar
    Artax

    This DLP administration has become exponents in “blame game theory.” After 8 years at the helm of government, rather than accept responsibility, ministers continue to blame the previous BLP administration, the global economic crisis, and those individuals who may criticize certain policies, for their short comings as well as their inability to tackle Barbados’ socio economical issues and inspiring investor confidence.

    During Tuesday’s parliamentary debate the blame game continued as I heard finance minister Sinckler blaming the BLP for the CLICO fiasco. He also mentioned former PM Arthur as having praised CLICO’s operations as well.
    It is common knowledge that Sinckler is the proverbial “bull in a China shop” type of individual. Apparently he believes that being boisterous and cantankerous qualifies one to become a politician.

    However, there is some merit in his comments relative to the BLP and CLICO. According to information received, CLICO’s financial statements for the years ended December 31, 1993 to 1996 and 1999 to 2004, were filed with the Corporate Affairs and Intellectual Property Office (CAIPO) on May 8th, 2006. Also, the financial statements for the years ended December 31, 1997 and 1998 were received by CAIPO on March 20th, 2007.
    Additionally, CLICO’s financial statements for the years ended December 31, 2005 and 2006 were filed with CAIPO on August 9th, 2007 and December 28th, 2007 respectively.

    This occurred under Arthur’s watch as minister of finance, and begs the question as to what were he, the then supervisor of Insurance and Governor of the Central Bank were doing to allow CLICO’s management to blatantly disregard financial regulations.

    What Sinckler CONVENIENTLY forgot to mention was that (interestingly and coincidentally), David Thompson was CLICO’s LAWYER would have known the company was tardy in preparing and submitting audited financial statements in a timely manner to CAIPO; and being a FORMER MINISTER of FINANCE (1993 – 1994) in a Sandiford administration, he would have KNOWN the COMPANY CONTRAVENED the Insurance Act.

    Yes, we must agree with Sinckler that Arthur praised CLICO. This was demonstrated when, on Saturday, June 2nd, 2007, while addressing CLICO’s Gala Awards ceremony at Sherbourne Conference Centre, then PM Arthur was reported as having said:
    “The growth and transformation of CLICO in Barbados has been impressive . . . . Clearly it has been achieved in large measure by the financial resources CLICO has been in a position to deploy . . . . I also have no doubt that the large and impressive investments that it is poised to bring on stream in Barbados have been inspired by its conviction that such clarity of purpose, soundness of policy and a climate of confidence will continue well into the future.”

    But after the collapse of CLICO in Trinidad, then PM Thompson sought to allay the fears of CLICO Barbados policy holders by deceitfully telling them CLICO Barbados and CLICO Trinidad are not “ARE NOT INEXTRICABLY BOUND.”
    On January 31, 2009 Thompson said: “With respect to the Barbadian operations, I have CONSULTED today with Minister of State in the Ministry of Finance Senator Darcy Boyce, the Governor of the Central Bank and the Supervisor of Insurance, who are the HEADS of the RELEVANT REGULATORY AGENCIES that OVERSEE CLICO’s operations here, and WE are FULLY SATISFIED that CLICO’S BARBADIAN OPERATIONS are SOUND, PRUDENTLY MANAGED and WELL REGULATED.”
    He subsequently approved a contribution of $10 million to CLICO Mortgage and Finance Company (CMFC).

    Rather than playing the blame game, Sinckler should acknowledge that since CLICO did not submit its 1993 financial information to CAIPO until May 2006, indicates the company was also TARDY under a former DLP administration (Sandiford). As such, he should probably enquire of CIAPO when CLICO submitted financials during the DLP’s tenure in the early 1990s.

    In the final analysis, both BLP and DLP MUST ACCEPT RESPONSIBILITY for the CLICO fiasco.

  7. David Avatar
    David

    @Fearplay

    You are making the point Enuff has made ad nauseam. We (civil society) have to engage.

  8. Tron Avatar
    Tron

    The question is not WHEN Bim will recover in economic terms, but IF Bim will recover AT ALL. After eight years of recession it is more likely that economy will never recover than the opposite. Barbadian politicians should not think about a growth strategy, but how to run an island with zero growth for an unlimited time. In other words the cake to eat gets smaller and smaller.

  9. David Avatar
    David

    The specter of the Jamaica experience exist. This is a country that has been labouring since the 70s.

  10. Tron Avatar
    Tron

    The question is not WHEN Bim will recover in economic terms, but IF Bim will recover AT ALL. After eight years of recession it is more likely that economy will never recover than the opposite. Barbadian politicians should not contemplate about a growth strategy, but how to run an island with zero growth for an unlimited time with rising costs for commodities. In other words the cake to eat gets smaller and smaller.

  11. Well Well & Consequences Avatar
    Well Well & Consequences

    Art…that’s the nuts and bolts of the problems, they all both D&BLP politicians still wine and dine and cocktails, huge on camera smiles with the Clico culprits, but draw the line at taking responsibility for enabling, helping and being involved in the Clico mess.

  12. Vincent Haynes Avatar
    Vincent Haynes

    David March 3, 2016 at 10:36 AM #

    The other side of the coin is working around the government as some young entrepreneurs are trying to do via the net…..will watch this development as it could be a quantam leap making the relavance of govt. in certain areas obsolete,especially taxes.As I said embryonic stage but a good outside the box idea.

  13. David Avatar
    David

    @Vincent

    Good to know but it is not an out of the box idea.

  14. David Avatar
    David

    PM Holness wants to make Jamaica centre of Caribbean – Latest News

  15. David Avatar
    David

    Something the media, relevant persons on the Hill et al can inform Barbadians about is why our SIDs in the Caribbean are not performing as as SIDs elsewhere. Why have almost all of our SIDs in Caricom been able to accumulate a debt to gdp of close to 100% and a few like Barbados greater than 100%. We have to start serious conversations and leave the politics at the door.

  16. Hal Austin Avatar
    Hal Austin

    I am fed up with pointing out that the governor is out of his league. All the nonsense of having worked for the World Bank is silly. The Bretton Woods Organisations are obliged to employ people of varying backgrounds.
    Central bank research is often hypothesis led.

  17. David Avatar
    David

    There is a report in today’s Nation the Central Bank has brought in an expert to improve economic forecasting. Apparently there is the view the CBB has been under forecasting. What does it mean?

  18. Artax Avatar
    Artax

    The annual one-year-ahead Budget forecasts that are typically based on rating up past tax revenues by growth rates in related macroeconomic variables such as GDP.

    Some governments would usually under forecast revenues every budget period in order to provide a cushion in the event of an unanticipated downturn in economic conditions.

    There are also instances whereby economists in government agencies may face pressure from politicians that introduce forecast bias, such as under forecasting economic growth, or forecasting positive growth, which may allow politicians to increase taxes or undertake programs that are beneficial to their political careers.

  19. Vincent Haynes Avatar
    Vincent Haynes

    We continue to discuss economics as if it is a proven science….it is not….and that is the basic flaw of western capitalist countries…..we have had western economic failures,yet we still hold on to this reading of tea leaves type operation.

  20. David Avatar
    David

    @Artax

    The BSS is responsible for gathering stats? Isn’t this the info we need to based all discussions?

  21. Gabriel Avatar
    Gabriel

    Artax @Mar 03,10.03am
    I am of the opinion OSA was hoping to have Clico come on board with the Pierhead Project and was therefore being generous in his comments on the Clico performance.Recall this was a time when maybe only Dupres and his financial advisers knew of the gathering storm clouds.

  22. Violet C Beckles Avatar
    Violet C Beckles

    David March 4, 2016 at 4:38 AM #

    Something the media, relevant persons on the Hill et al can inform Barbadians about is why our SIDs in the Caribbean are not performing as as SIDs elsewhere. Why have almost all of our SIDs in Caricom been able to accumulate a debt to gdp of close to 100% and a few like Barbados greater than 100%. We have to start serious conversations and leave the politics at the door.
    @@@ Corruption on every Level of the Legal and Justice System ,if you keep waiting for books to be written to wake you up then keep sleeping as your World burn around you,
    All to Most of the players are taking Bribes , payoff, kick backs , conflicts of interest , I know its hard for you to believe people you may not like or know, but the truth remains the same , Use your own head and Math,

  23. Violet C Beckles Avatar
    Violet C Beckles

    David March 4, 2016 at 12:53 PM #

    There is a report in today’s Nation the Central Bank has brought in an expert to improve economic forecasting. Apparently there is the view the CBB has been under forecasting. What does it mean?@@@@@

    Any expert just need to focus on fraud, not talking about what we talking about will not make it go away, Look for other answers to avoid calling names of friends and family is nothing more than a cover up,
    All answer is in the land, banks, lawyers, judges, cover up , holding you nose does not make the stink go away,
    Forecasting crime is easy when you know the players, and their names, We need to get to work to much long talking , Laundering is done in and at the banks, and not at westernunion as they want us to believe .
    Check the Ministers, and all the lawyers in Government taking turns moving money,

    We hope they see Jail in the forecasting
    Coming clean will dirty a lot of life long crooks, So get your soap ready

  24. Vincent Haynes Avatar
    Vincent Haynes

    Interesting…..

    http://www.bsjbusiness.com/#!Barbados-foreign-reserves-fell-in-January-to-lowest-level-since-2013/cjds/56da6eee0cf249e9dfd32a2c

  25. are-we-there-yet Avatar
    are-we-there-yet

    David; re your 12:53 pm vote yesterday;

    The evidence of the past 7 or so years suggests that the CBB has been generally OVER forecasting not under forecasting? Does the CBB really need outside assistance for this or would one expect that its own staff should be more than competent in this area?

  26. David Avatar
    David

    @are-we-there-yet

    How can economic forecasting be an issue if government projects and initiatives (you can name several)have stalled, been long in gestation or significantly modified.

  27. Vincent Haynes Avatar
    Vincent Haynes

    David

    Has any due dilligence been done on this lot?

    http://www.barbadostoday.bb/2016/03/05/the-sands-gets-us10-5m-injection/

  28. David Avatar
    David

    @Vincent

    We should welcome the investment from where ever it comes even if much of the investment in 2016 is concentrated around tourism projects.

  29. are-we-there-yet Avatar
    are-we-there-yet

    David;

    The issue is then the ability of the forecasters to judge the likelihood of proper implementation and timing of the various projects rather than the nuts and bolts of producing the forecasting numbers per se. Thus the question becomes that of the honesty of the Bank in the acceptance of projects into its bag of tricks and its track record of seeing through political misdirection.

    Accurate forecasting cannot escape charges of political shaping when a CB has had serious questions asked about the accuracy of its statistical underpinnings and such statistics seem to be supportive of an alignment to the current political narrative.

  30. are-we-there-yet Avatar
    are-we-there-yet

    David; re your 11.01 post

    Really!!
    Or is that just tongue in cheek?

  31. David Avatar
    David

    @are-we-there-yet

    Yes tongue and cheek.

    The central bank can perfect its forecasting model all they like, underlying good forecasting are assumptions based on historical trends. Historical data is based on actual performance.

  32. NorthernObserver Avatar
    NorthernObserver

    “We should welcome the investment from where ever it comes”
    YES they should. Because when Bajans and their corporations are investing elsewhere one is at the mercy of others? Beggars cannot be choosers?
    And today Bim is on par with many, despite a local arrogance that somehow “we” are better. And yes you will attract some sub-standard investors, but you cannot expect to attract the cream of the crop, when the underlying infrastructure, both physical and financial/legal, are in disarray.

  33. are-we-there-yet Avatar
    are-we-there-yet

    NorthernObserver; re. your 2:18 post

    So you agree that “We should welcome the investment from where ever it comes”

    Here’s a hypothetical where significant investment is being offered to Barbados.

    A new startup Tech company is offering to set up a 5 billion dollar US company here to harvest solar energy using a newly developed unique system of high tech nano mirrors that will convert sunlight to energy at near 100% efficiencies. The company will use their own funds for setting up the system that might in exceptional circumstances cause some “minor” environmental effects and health hazards that will be underwritten by the Company. The system produces operational temperatures that are in the 5000 deg C range and requires the use of 1/10th of Barbados’ average daily supply of water. Organic Waste can be also used as a feedstock in one spinoff of the system. Barbados can turn around its economic prospects in 3 years according to the projected yields of energy.

    Yuh tink we shud welcome de investment and muzzle anyone who dares to suggest dat we should not?

  34. NorthernObserver Avatar
    NorthernObserver

    @AWTY
    I was also tongue in cheek

    For when “the underlying infrastructure, both physical and financial/legal, are in disarray”, whom else do you think one will attract?

  35. David Avatar
    David

     

    Caribbean Weekly Trade & Development Digest – February 28 – March 5 2016

    by caribbeantradelaw

    These are some of the major trade and development headlines and analysis across the Caribbean region and the world for the week of February 28- March 5, 2016 : Regional Biofuel Manufacturer to invest US$95 million in Jamaica plant by 2017 South Florida Caribbean News: As renewable energy demands increase globally, biofuel developer Benchmark Renewable […]

    Read more of this post

  36. David Avatar
    David

    The 731 page Draft Estimates 2015/2016 laid in the House excess expenditure over revenue 1.7 billion.

    http://www.barbadosparliament.com/uploads/document/88b436965f7a3775b192661d36161c07.pdf

  37. David Avatar
    David

    Bigger Budget

  38. NorthernObserver Avatar
    NorthernObserver

    One thing is for sure…deficits don’t scare them.

  39. NorthernObserver Avatar
    NorthernObserver

    Caribbean Weekly Trade & Development Digest – February 28 – March 5 2016
    by caribbeantradelaw

    “The Governments of Barbados and St. Lucia have decided to proceed to the negotiation and conclusion of an agreement establishing the maritime boundary between the two States.
    The Barbados delegation was led by Ambassador Robert Morris, Barbados’ High Commissioner to St. Lucia. The delegations of St. Lucia and St. Vincent and the Grenadines were headed respectively by Dr. June Soomer, Ambassador of St. Lucia to CARICOM and the OECS and Commander David Robin, Director, Maritime Administration of Saint Vincent and the Grenadines. ”

    I was expecting our Saudi friend to lead the negotiations?

  40. Hants Avatar
    Hants

    AN INTERNATIONAL ECONOMIST says highly indebted countries like Barbados may have to seek debt forgiveness as part of the strategy to get out of the spiraling crisis.

    http://www.nationnews.com/nationnews/news/78787/economist-suggests-debt-restructuring-barbados#sthash.yQafndEa.dpuf

  41. Vincent Haynes Avatar
    Vincent Haynes

    Interesting statement attributed to irish economist Mr McWilliam by the Broad Street Journal.

    Noting that our’ gross national debt had been put at 132% by the International Monetary Fund, Mr. McWilliams said “You don’t want to be there,” and we eventually will have to do a major restructuring, in order to lower our debt.“The stronger Barbados dollar will eventually need to be rebalanced because if your balance sheet has too much debt, it will have to be reduced.”

    …..and then this bit by Ms Dukharan.

    While lauding the government’s efforts to reduce its fiscal deficit, she said a fiscal deficit of even 4%, which would be a great achievement in the present financial circumstances, would still add $400 million more per year to the national debt. And while policymakers often turned to John Maynard Keynes for justification of their continuing to borrow money even when the economy was down and GDP was shrinking, Ms Dukharan said that once the debt of a country like Barbados, which imports the majority of its goods and services, passed 60% of GDP, more spending made the situation worse.

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