Prime Minister Freundel Stuart says he understands the cries of residents and businesses alike over the $542 million austerity package announced by Minister of Finance Chris Sinckler in his recent Budget.
However, speaking on the sidelines of the just-concluded Caribbean Community (CARICOM) Heads of Government Summit in Grenada, Stuart suggested that the measures amounted to a necessary evil, while acknowledging that they were likely to have a deleterious effect on the overall cost of living in Barbados.
Among the measures announced in the May 30 Financial Statement and Budgetary Proposals were an increase in the National Social Responsibility Levy from two per cent to ten per cent, a two per cent tax on all foreign exchange transactions and a hike in tax on fuels, with the International Monetary Fund (IMF) currently forecasting that the island’s overall economic growth will slow to less than one per cent this year, reflecting the fiscal consolidation efforts introduced in the Budget.
The IMF has also warned that domestic inflation, which stood at 3.2 per at the end of last year, is likely to double to 6.7 per cent by the end of 2017, amid concerns being expressed by individuals and businesses that they simply will not be able to cope.
However, Stuart argued that while no government enjoyed having to increase taxes, it was better than having to send home workers.
“It is better, I think to be going to work every day and having to deal with a higher price here or higher price there than not to be going to work and having to deal with the same prices anyhow. And of course if you are not going to work you can’t deal with the prices at all. You can’t get the things you want,” Stuart said, while adding that the current public outcry was “understandable”.
He also maintained that the economic problems facing Barbados were not as a result of local circumstances, but said he was confident they would eventually stabilize.
“The point has to be made over and over and over again, the last ten years have been the most difficult years for the entire Caribbean since the 1930s. And that was not of Barbados’ creation or Guyana’s creation or Jamaica’s creation. This happened outside of the Caribbean but we have been feeling the effects in the Caribbean and we just have to ride this through and I am sure when all is said and done, life will get somewhere near back to the normal to which we have been accustomed,” the prime minister assured.