“You shall take your tambourines, and go forth in the dance of the merrymakers” – Jeremiah 31:4
There has been much discussion this week about the IMF’s advice to Barbados and other small economies, which includes the devaluation of its currency, and reports that the Governor of the Central Bank of Barbados, Dr. DeLisle Worrell, vehemently rejecting that advice.
Barbados’ currency has been pegged to the US dollar at the rate of two to one since 1973. Why change it? I recall siting on a panel with Dr. Winston Farrell from Trinidad and Tobago, it must have been a few decades ago, where he made the statement to the effect that a country can set its exchange rate at whatever it wants as long as it is prepared to support it with the appropriate macro-economic policies.
Indeed, in 1991, when the Barbados economy was in crisis (we only had foreign exchange to purchase one week’s imports), Barbados was under IMF pressure to devalue its currency but we did not. The exchange rate was supported by macro-economic policies, which included laying off public sector workers, the freezing of prices and incomes (except one could justify an increase based on enhanced productivity in any given productive sector). This strategy, which included the establishment of Private/Public sector partnership entity (the social compact) and a national productivity council, has been deemed to be responsible for the recovery of the economy of Barbados to its position of relative strength in the ensuing 20 years.
I agree with Dr. Worrell – why tinker with the exchange rate? However, I also support Dr. Farrell’s theory but stop short of recommending immediate short term supporting adjustments in macro-economic policy since that is more within the purview of the fiscal and monetary policy experts. What is absolutely clear to me, however, is the need for a medium and long term strategy to grow the economy of Barbados. This must be an amalgam of an enhancement of the marketing strategies of the sectors that have served us well and the provision of a user friendly enabling environment for the emerging “sunrise” sectors of the economy. Barbados must dance its own dance!
Last Wednesday night, Dr. Chelston Brathwaite delivered the feature address at the Vocational Awards dinner of the Rotary Club of Barbados South at which Harold Hoyte, past President and Editor-in-Chief of The Nation Publishing Company in Barbados, received an Honour.
Dr. Brathwaite was band on queue giving his reflections and asking the question Does Barbados need a new development model? He posited, in his evangelical style, that “never before in the history of the world have we faced a financial crisis of such magnitude, an environmental crisis, an energy crisis, a health crisis and a food crisis -all at the same time. It is now becoming clear that we face an unemployment crisis as well.
He continued: “Ladies and gentlemen, as a nation we have made great progress in the last forty-five years. So what is our vision for the next forty-five? What must we do today to ensure that we continue to progress and not return to the life of the 1960s?…
I would like to mention ten elements that I consider as key to our future: (1) Strengthen CARICOM and link more strategically with Latin America and the BRIC (BRIC – Brazil, Russia, India and China) economies; (2) Continue to give priority to education, but promote an education based primarily on science, technology and innovation; (3) Diversify the tourism industry; (4) Promote healthy lifestyles to reduce cost of health care; (5) Support an aggressive policy on small business development and entrepreneurship; (6) Become a centre for excellence in solar technology; (7) Establish a national task force on employment; (8) Establish a council of wise men and women who are outside the political process to strategize and plan for the Barbados of the future; (9) Preserve our culture and our history and stay away from the credit card culture; and (10) Modernize the Agricultural sector.”
Dr. Brathwaite then expanded each of the ten elements above in a brilliant oratorical discourse after which he emphasised that these are difficult times for all in which the individual, the entrepreneur and the private sector will play an increasingly important role…We need a long-term development plan for our country… We need everyone to work together to open windows of opportunity and to provide rays of hope for the children of this country… so that they too can look to horizons beyond those to which they were born. So that they may dream dreams of greatness and have the tools to achieve their aspirations. I hope that we can contribute and assist in producing the men and women of the 21st century who will be responsible for the continued progress of this nation.
He concluded that “The measure of our success as a nation will not be the number of cars per capita or how many cell phones we have in this country, the measure of our success will be whether we have built a society where all of our citizens can participate in the benefits of development and where long-lasting institutional arrangements are made to provide for security, health, education, energy, water and food for the nation. Let us continue to work together to make this the greatest small society on the earth.”
Dr. Brathwaite’s address is required reading for all who are interested in the development of small island states. You may request a copy by email to email@example.com but look out for it soon on the website below