Governor Dr.DeLisle Worrell Tells Business People That Barbados Remains Committed to Fiscal Consolidation

In the health of the economy, as in the health of our people, Barbados faces the challenges of success. In regard to physical health, the chronic diseases that plague us are the diseases of affluent societies. With respect to the economy, our high costs are a reflection of our relatively high living standards, when compared to our peers in the region and elsewhere. This is, after all, the reason we seek economic growth, to improve the quality of life for all Barbadians. Because we have been more successful than our regional peers, our labour costs are higher. Because we have been more successful in attracting buyers of second homes, particularly in the mid-2000s, property values skyrocketed, though they have since moderated. Achieving top dollar on sales of property on our small island is also in our best interests.

The way we continue to enhance our competitiveness is to build on our successes, firmly establishing the Barbados brand as a symbol of excellence, improving the productivity of our labour force, upgrading and enriching our products and services, and seeking effective ways to improve the business climate in this country. Strategies such as these are pursued by successful companies and countries around the world.

Barbadians instinctively understand that all those who say our currency is overvalued are in effect saying that the average Barbadian worker lives too well. We reject the notion that we should lower our workers' standard of living in order to become more competitive; the ultimate objective of competitiveness and growth is to raise the workers' standard of living, after all.

Barbadians in all walks of life have already embarked on the path to our future. Our leading private sector entrepreneurs have continued to invest in new and upgraded facilities in tourism and related services; they lead the way in developing world class sports facilities for polo, golf, yachting and motor sports; our cultural practitioners are on the march, most spectacularly in music, but with promising initiatives in many other fields; our chefs and restauranteurs now offer a varied, exciting and creative cuisine which is being constantly extended; and individual enterprise is springing up all around, as people cut and contrive in difficult times.

Government is doing what is needed to stabilise the Barbadian economy, to ensure foreign exchange reserve adequacy, and to protect the value of the Barbados dollar. In addition, a strategy of fiscal consolidation to reduce the Government deficit and to achieve internationally comparable levels of efficiency is being put in place and is being revised as we go. The efficiency gains are proving elusive, but available tools and techniques are being brought to bear, with the help of international institutions, to help in attaining our goal.

Barbados' future growth is grounded in the country's institutional strength, and the openness and involvement in debate and understanding of economic issues affecting the lives of ordinary people and the future of our country. The real value of our social partnership was most evident in the national consultation on the economy last year, when all parties were made aware of the gravity of the external imbalance which had recently emerged. In meetings since then, both of the full social partnership and of the groups and committees established under its umbrella, there has been an opportunity to share opinions on the details of the adjustment programme, but there has been no disagreement on its necessity, or its magnitude. That is remarkable; the international community is impressed, though we take it for granted. In addition to the social partnership, we have the National Productivity Council, the National Initiative for Service Excellence, the Joint Policy Working Group for International Business, and other institutions with expertise to address the challenges of transforming the public service so it provides better value for the tax dollar. That continues to be the ultimate goal of fiscal consolidation.

Last month I was invited to address an online leadership seminar hosted by UWI's Open Campus on the topic of "Leadership in a Financial Crisis". I began by confessing that I have no personal experience of leadership in a financial crisis. There has been no financial crisis in Barbados since the Central Bank was established, and there is most certainly no financial crisis of any kind in Barbados - or anywhere else in the Caribbean - at the moment. We do face challenges, but we should not overstate their magnitude, nor should we underestimate our ability to surmount them, with determination, patience and persistence. We have stabilised our external balances, the value of our dollar is protected by adequate foreign reserves, and we are embarked on an appropriate private-sector-led strategy of growth, with emphasis on the foreign exchange sectors. Fiscal consolidation remains a work in progress, being kept on target through upgraded monitoring and feedback mechanisms. Government continues to implement policy in a flexible and interactive way. We are applying the appropriate remedies for our economic ills, and all that remains is to be confident and persistent.

I was last in touch with you in this way at the beginning of July, and I hope to be able to share thoughts with you on the economy at the start of each month. Please be in touch if you have any thoughts or suggestions for me, on this or any other topic of economic interest.