The global financial and economic crisis has brought the world economy to its knees, leaving even some of the most powerful countries with problems such as increasing unemployment, declining growth rates, rising fiscal deficits, and mounting public debt.
Given the increasing integration of economies worldwide, the problems encountered in the advanced countries rapidly spread across the globe, resulting in widespread negative consequences for small, developing economies like Grenada and others in the Caribbean.
The unravelling of the global economy was a clear reflection of the limitations of existing policies and inherent weaknesses in the economic paradigm of the day. But perhaps the most striking legacy of that episode is the recognition of all and sundry that it cannot be business as usual.
In short, many questions have now arisen in relation to the appropriate response mechanisms to not only prevent a re-occurrence of recent events, but more importantly to get the world economy back on a sustained growth and development path. The challenge, thus far, seems to be that there are simply more questions than answers.
In the United States, for example, the Obama Administration continues to advocate higher spending as the major instrument of economic change. That policy clearly does not receive the blessings of the Republicans who prefer to limit Federal spending and instead lower taxes as an incentive to stimulate private sector investment.
Ideology aside, the fact remains that so far the economic policies pursued are having little effect on the overall fiscal and debt situations in the country and on peoples’ confidence in the local economy.
Here in Grenada, the experience is not dissimilar. Despite all the efforts of the Government, the economy continues to remain depressed with many of the major macro-economic indicators showing little signs of recovery. Without doubt, the most alarming situation remains the huge deficit on the Government’s fiscal account.
Even though there is some optimism that the economy will return to positive economic growth following the passage of a structural adjustment programme with the IMF that by itself will not resolve the Government’s fiscal problems any time soon.
At this critical juncture, Grenada needs a complete overhaul of its economy. New strategies have to be developed to, among other things, bring the cost of living down, raise the level of capital inflow, create employment opportunities, lower the public debt, grow the local economy, boost consumers and investors’ confidence, and reduce the Government’s fiscal deficit.
The accomplishment of these objectives requires the right mix of fiscal and general economic policies along with a targeted set of socio-economic goals.
Recently, we have had inputs from several sources in relation to issues pertaining to the Government’s social programme and the relative importance of the real sectors to the Grenadian economy. Dialogue on these as well as other relevant matters must continue to raise awareness and stimulate action. That is important since no individual or entity has a monopoly on knowledge or ideas.
However, the exchange of ideas alone will not generate workable policies to transform our economic landscape. That outcome requires strong leadership from those in authority in the public and private sectors, our trade unions, and other social partners.
Left with lots of questions but little answers, the country will be no better off any time soon!
Dr. Brian Francis, the former Permanent Secretary in the local Ministry of Finance, is a Senior Lecturer in the Department of Economics at the Cave Hill Campus in Bridgetown, Barbados of the University of the West Indies).