BUDGET 2016: MORE QUESTIONS THAN ANSWERS (PART TWO)

BrianFrancisLast week’s column looked at the 2016 Budget from a conceptual basis with emphasis on the overall content and structure of the presentation made by the Right Honourable Prime Minister and Minister of Finance to the House of Representatives.

This week’s contribution examines the various offerings in the Budget from the standpoint of what was promised by way of a “New Economy” in the NNP’s 2013 manifesto but also from the perspective of what the Grenadian economy requires for long term growth and prosperity.

From a macro-economic perspective, the major offerings in the Budget can be summarised as follows: scholarships to Grenadians to pursue studies in Health, Education, Agriculture, ICT, and Tourism; promotion of youth entrepreneurship; special mortgage programme primarily targeted at public servants that is managed by the Grenada Development Bank; incentives to businesses that include an increase in the time to carry forward losses from three to six years and a tax deductible for training including support for youth development programmes; emergency relief fund to assist farmers in the event of loss of crop and income; new initiatives to boost fish exports; solarisation of government buildings and retrofitting of air-conditioned units; and possible commencement of some capital projects, both private and public.

But what was promised by way of a “New Economy” in the NNP’s 2013 manifesto?  To avoid ambiguity, I will quote selectively from pages 6-9 of the manifesto, focusing on the more pertinent issues. According to the manifesto, the NNP would create a new economy that is based upon “World Class Tourism Complemented by an Efficient and Equitable Macro-Economy.”

The manifesto continues: “The “New Economy” envisions a world class tourism, yachting and marina destination, complemented by efficient business, finance and information technology services, an efficient light manufacturing sector, competitive agri-businesses producing a diverse range of food and agro-industrial products and services dedicated to oils and flavour extraction for health, cosmetic and pharmaceutical applications, and fuelled by a dynamic oil and gas and renewable energy sector.

The NNP views the creation of a stable economic climate, the facilitation of an enabling environment for growth, and job creation as top priorities which can be realistically attained even as we mitigate the impacts of the global recession. We pledge to restore confidence in Grenada’s economy. We commit to create an environment in which Grenadians can shape their own destiny through free enterprise and hard work. We assure all citizens of a Government which makes strategic economic decisions that will benefit our people.”

On the strategic side, according to the manifesto: “…Grenada’s “New Economy” must provide job opportunities for those who wish to work; business opportunities for those who choose to invest; opportunity for wealth creation and prosperity for those prepared to sacrifice and play by the rules; and social justice for all who believe in equality and human rights…Our approach to stewardship of the economy is underpinned by: Recognition that the private sector and non-state cooperative enterprises are the engines of our economic system…Commitment to prudent public policy-making that enables private sector activity, efficiency in the civil service and government business, and effective policy implementation and enforcement, resorting to direct intervention in productive endeavour only in exceptional circumstances…Pursuit of deeper integration in the OECS Economic Union and the CARICOM CSME… Recognition of the need for continuous investment flows by attracting domestic (including CARICOM) and foreign investors into high-growth sectors and high employment industries, accommodating the entry of credible financial institutions in Grenada to support the development of investment and equity funds and micro-financing.”

I ask you, fellow, Grenadians, does the 2016 Budget come even remotely close to delivering on the promises made by the NNP in its 2013 manifesto – its contract with we the people?

Evaluated from the perspective of the promises made by the NNP in its 2013 manifesto; specifically, the creation of a “New Economy”, the major offerings in the budget, summarised earlier, cannot withstand the scrutiny of public opinion.  When placed under the microscope of transparency vis-à-vis providing to the Grenadian people much needed details and justification regarding the content of a plan that should have sought to invest in the country’s future and commit to an economy that rewards hard work and strengthens the middle class, the 2016 budget has fallen way short.

Imagine, the Right Honourable Prime Minister and Minister of Finance told the House of Representatives that: “I am pleased to confirm that the budget has no new taxes”.  To this writer, that statement should be seen as a “mere puff of words” since the budget does not provide for any relief in taxes which is so needed to help hard working families feel more secured in their future, in a real sense.

Additionally, the budget failed to put forward any critical ideas to accelerate and sustain economic growth in the long run; to transform important sectors such as education and health; and real strategies for reducing the high unemployment, especially among women and the youth. The budgetary proposals should have contained clear plans designed to assist Grenadian workers in upgrading their skills so that they can compete for higher jobs and better pay as well as create real conditions for businesses to keep generating new employment opportunities for those who are qualified to exploit.

While the attrition policy is welcomed to reduce public expenditure, a significant amount of emphasis should have been placed on eliminating inefficient spending and reforming taxes for middle class families in order to create a more sustainable fiscal path.

In short, therefore, the 2016 budget, less its superfluity of words, does not adequately prepare the foundation for the Grenadian economy to “take off” in the years to come for reasons that include the following: it has failed to proposed how Grenada can become a magnet of job creation and opportunities for many workers; it has failed to outline measures for the strengthening of communities throughout the Tri-island State; it has failed to show precisely how it would become easier for investors to do business in Grenada while keeping the nation at the forefront in terms of socio-economic policy changes and development.

Finally, let me zero in on some of the key ingredients for the Grenadian economy to generate long term growth and prosperity:

(1) a strategy for the development of tourism that recognises that vital industry as demand-driven and hence we are supposed to be selling an “experience” to our visitors. What precisely are we offering visitors to our shores?  Why would a visitor return to Grenada for a second, third or fourth time?  How reliable are the services we offer visitors?  What is different about the Grenadian experience from that of other counties?

(2) We need to link tourism to agriculture, manufacturing and other sectors of the economy so that growth in tourism spurs increased economic activities in those other sectors.

(3) The creation of value added in agriculture so that more benefits can be brought to our farmers, fishermen and others which subsequently will redound to the good of the nation overall through higher real rates of economic growth.

(4) The creation of high-quality, good paying jobs particularly in the private sector in areas that can create and generate a competitive advantage for Grenada, leading to the export of goods and services to countries all over the world.

(5) A suitable model of financing of education and health care that can stand the test of time. The government is incapable of funding education and health care to the extent required to improve the quality of those services to world standards.

My fellow Grenadians, all of the ideas suggested for the transformation of our economy in the long term to make it more prosperous can be implemented within a few years.  Moreover, they are all consistent with the notion of the “New Economy” that was promised us by the NNP. The missing link is the lack of will on the part of the NNP to do what it said it would do to reconfigure the social and economic landscape of this country.

Going forward, as citizens who care very much about the development of our country, we can all only urge the government to return to its 2013 manifesto and start putting in place the programmes, plans, policies and strategies that it promised the Grenadian people!

(Dr. Brian Francis, a former Permanent Secretary in the local Ministry of Finance, is currently a Senior Lecturer in the Department of Economics at the Cave Hill Campus in Barbados of the University of the West Indies)

Bookmark the permalink.

Comments are closed.