Caribbean & Central America - February 2014 (ISSN 1741-4458)

*** CRACKS APPEAR IN BARBADOS GOVERNMENT. The Democratic Labour Party (DLP) was returned to power for a second term almost exactly a year ago. Its election platform was unequivocal: it promised “stability through austerity”. And this is what Prime Minister Freundel Stuart has sought to deliver, including through the lay-off of 3,000 civil servants. In early February, however, Agriculture Minister David Estwick broke ranks and publicly opposed what he called the “wrong medicine”. Estwick’s criticism has added weight because of his status as a former finance mnister.

Estwick said that the government’s strategy would not fix the country’s US$700m current account deficit. In an interview with Barbados Today, published on 4 February, he said: “You can’t cut and tax your way out of that, which is the old budgetary tool, which is a classic IMF way of delivering it.”

Estwick is arguing for more action on reducing debt-servicing costs and for a growth strategy. He said: “You cannot do it [cut jobs] if you don’t have a concomitant growth going along the same time, so that you can absorb any of the public sector contractions by loss of jobs. We don’t have a growth strategy going because the growth strategy is compromised by cost.”

The agricullture minister’s intervention came a week after the commencement of the plan to lay-off 3,000 civil servants. Finance and Economics Affairs Minister Chris Sinckler said that the cuts in public-sector jobs would help the government save US$70m. He added that the government intended to follow a “strict programme of attrition” with regard to public-sector jobs and that it would only reappoint to posts when unavoidable over the next five years.

Estwick’s criticisms echo last year’s election campaign by the Barbados Labour party (BLP), which promised a rejection of the “IMF-type model” and “a fundamental change in macro-economic policies”. The prime minister, however, can justifiably say that he did not hide his support for, and the need for, austerity measures during the February 2013 campaign.

In a response to Estwick, given in a speech to supporters on 9 February, Stuart emphasized the importance of maintaining course, saying: “You can’t be vacillating and changing today and changing tomorrow. That’s why you build a house according to a plan.” He did, however, urge the private sector to show less “analysis paralysis” when it comes to investments and to “take the ball and run with it”.

*** CHALLENGE FOR TRINIDAD OPPOSITION LEADER. People’s National Movement (PNM) leader Keith Rowley is to be challenged for the leadership of the party by Penelope Beckles-Robinson at an internal election to be held on 18 May. Announcing her challenge, Beckles-Robinson said: “The fundamental issue that confronts our nation is that of leadership: the people deserve decisive, compassionate, inclusive, and pragmatic leadership.” Beckles-Robinson is an attorney and a former member of parliament who has previously held government posts.

*** IMF CONCLUDES ASSESSMENT OF ST KITTS & NEVIS. An IMF team visited St Kitts & Nevis from 20-31 January to review a three-year stand-by arrangement. According to the IMF, GDP grew by 1.7% in 2013 on the back of a pick-up in tourism and construction. The IMF also noted: “The fiscal position has substantially improved, from a deficit of 7.8% of GDP in 2010 to a projected surplus of 8.6% in 2013.” For 2014, the IMF is projecting growth of 2.5%-3.0%. Over the medium-term, it says “the economy is expected to continue to recover and reach its potential growth rate of about 3%-3.5%”.