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The Economy: A UPP Failure

The Economy: A UPP Failure

May 26, 2014 @ 2:36 PM
by ablpadmin

by Everton Barnes

The United Progressive Party (UPP) is a political party with one major characteristic; it fails to accept any responsibility for anything that happened under its watch. So when Antigua and Barbuda economy declined by twenty-five percent over a three year period (figures provided by the Economic Council for Latin America and the Caribbean ECLAC), it was the world economy downturn. When the Social Security Scheme reported that the number of employed persons in the country fell from 46-thousand to 36-thousand, again it was the world economic crisis. When the tourism industry stagnated, again the UPP government repeated the well-worn refrain, world economic crisis.

The Antigua and Barbuda Labour Party (ABLP) has been saying that yes, the world economic crisis has had an impact, but the real reason for the economic decline has been the incompetence of the Baldwin Spencer Administration. That the government mishandled the economy in a number of ways which had the effect of stagnating the economy. Additionally, the ABLP charged that the Spencer Administration lacked foresight, vision and creativity to come up with ideas and policies that would combat the negative effect of the worldwide conditions.

I have always held the view that the Antigua and Barbuda economy would take much less to turn around than a major economy such as Jamaica or even the United States. For example, to illustrate the point I often described the United States economy as that of a major oil tanker. Such a vessel needs a particular depth of water and a large area of water just to turn around. But the Antigua and Barbuda economy is like a small sailboat that is much nimbler and easier to manoeuvre. But it takes a particular skill to be able to accomplish that.

The UPP went to the International Monetary Fund (IMF) right after the 2009 general elections, even though when the arrangements were announced prior to the elections, there was a loud chorus of denial both from the party and the government and the interestingly from the IMF as well. The three-year agreement ended in the middle of last year, and earlier this year the IMF did its first post-agreement review of the local economy. It gave the Spencer Administration an ‘F’ for the economic performance. ‘The Antigua and Barbuda economy is facing headwinds’, the report published on the IMF website on May 1st, 2014, declared. It also raised alarms at how the government was spending money and noted that there are reasons to be concerned about other aspects of the economy.

The IMF assessment did not point to any ‘world economic crisis’ as the basis for the state of the local economy. It laid the blame squarely at the feet of the UPP Government.

By contrast, the IMF did a similar review of the St Kitts-Nevis economy. Where Antigua and Barbuda economy declined, the St Kitts Nevis grew by 3.8 percent, which is seven and a half times the meagre growth recorded in the local economy. “The economic recovery in St. Kitts and Nevis has gathered momentum, with real GDP growing at an estimated 3.8 percent in 2013 reflecting a pickup in tourism, a strong expansion in construction activity related to large Citizenship-by-Investment (CBI) inflows, a substantial increase in public sector investment, and impetus from the People Employment Program (PEP). Preliminary data for 2013 shows wages increased by 10 percent while employment expanded by 19 percent, mainly reflecting the impact of the PEP. Inflation declined to 0.4 percent at end-2013, and continues to be low, at 0.1 percent at end-March 2014 (y/y). The financial system is stable although the recovery in economic activity has not yet translated into increased lending to the private sector, as banks remain cautious,” the IMF statement said.

We recall that the Antigua and Barbuda was the unquestionable leader in OECS arrangement with the strongest economy and leader in all the key variables, now in many respects St Kitts-Nevis and other states have leapfrogged Antigua and Barbuda.

The question therefore is what has St Kitts-Nevis done that Antigua and Barbuda is not doing. Both went to the IMF for assistance, yet St Kitts-Nevis seems better for the experience than has Antigua and Barbuda. I wish to humbly suggest that the difference between both countries is that intangible for very important variable, human intuition and creativity in short, human capital. St Kitts-Nevis seems to be in hands of a team which better understands how to run a country and how to make it succeed. Clearly, those skills are not present in the current UPP Administration.

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