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News > Latin America

Barbados' Former PM Warns: 'Economy Must Be Stabilised'

  • Former Prime Minister of Barbados Arthur Owen says stringent policies must be implemented to resuscitate the ailing economy.

    Former Prime Minister of Barbados Arthur Owen says stringent policies must be implemented to resuscitate the ailing economy. | Photo: EFE

Published 17 May 2018
Opinion

Former Barbados Prime Minister Owen Arthur said "an intelligent conversation" must transpire in order to save the Caribbean island's failing economy.

Barbados' former Prime Minister Owen Arthur has cautioned that regardless of which political party emerges victorious in the May 24 general elections, stringent policies will have to be implemented to resuscitate an ailing economy.

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"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," Arthur told a press conference.

Canadian firms based in Barbados paid one percent taxes "and remitted their profits and dividends to Canada without having to paying taxes on those dividends," he continued.

The country's longest-serving prime minister said the economy had performed "very poorly" in the past three months. 

"Reserves hardly increased… the public finances are still in a state of distress… the government of Barbados owes the National Insurance about US$200 million which it cannot pay; it owes the public large sums of money and there is no immediate solution for our economy."

Arthur, who announced his retirement from politics earlier this year, said the incoming government will have to "invent an alternative reality... 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."

He also stressed that "an intelligent conversation" must develop in order to rescue the failing economy.

In March, the former governor of the Barbadian Central Bank, Delisle Worrell, said: "The Central Bank's foreign reserves continue to be in freefall, with the failure of the government's corrective strategy.

"The current costs of government operations exceeded revenues by US$144 million between April and December last year, and Central Bank's lending to the public sector increased by US$186 million during the year.

"Unless this gap is closed, foreign reserves (Forex) will be exhausted, and government will lose control of the exchange rate."

Worrell, who was sacked last February by Minister of Finance Chris Sinckler, said the accelerating loss of foreign reserves proves a failure on the part of the government to adjustment policies to the current economic reality.

According to the analyst, Barbados' Central Bank has lost over US$500 million of foreign exchange since December 2012. Reserves have fallen from US$123 million in 2016 to as low as US$50 million in 2018.

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