The International Monetary Fund seems to be a tad concerned that Barbados has blown it’s brains out and recklessly emptied it’s wallet over a few cricket matches.
Although the Barbados Advocate article below is horribly written (probably just cut and paste from some source), it contains one very telling sentence…
“In general, Caribbean public investment has shown a relatively weak link with growth, suggesting the need to increase the efficiency of these outlays.”
In other words, we never see a real return from government “investment” of our tax dollars. No kidding!
Also unsaid in the IMF report is how much “public investment” finds it’s way into bribes, overbillings and secret commissions to crooked politicians and public officials. Of course, without integrity and conflict of interest laws, and mandated transparency through freedom of information legislation, this kind of theft will continue.
That’s why Owen Arthur and David Thompson and all the rest have not introduced Integrity Legislation in the past.
IMF CWC WARNING
Web Posted – Tue Apr 17 2007
By Shawn Cumberbatch
CRICKET World Cup (CWC) 2007 could hit Caribbean economies for six.
That’s the warning from the International Monetary Fund (IMF), which cautioned that the estimated $500 million in construction costs alone spent by Barbados and eight other host venues, were likely to score diluted economic benefits.
Future prospects, said the Washington D.C.-based financial institution, would hinge critically on the region’s ability to market itself as a tourism destination following the event, The IMF’s projections were contained in its just-released regional economic outlook for the Western Hemisphere.
In its analysis, the organisation said CWC had boosted private and public construction across the nine host countries, helped by generous tax concessions, external grants, and public borrowing.
It noted, however, that while the positive effects on the tourism sector could extend into the medium term, there is concern that the net effect of the CWC could well be negative in light of its heavy fiscal costs and already high public debt burdens in the region .
A brief examination of the growth and fiscal effects of the 2007 Cricket World Cup by IMF economist Padamja Khandelwal said the reason the economic benefits of the event would be watered down was because matches are spread across multiple countries, and are taking place in the midst of the peak winter tourist season when occupancy rates are already very high .
In general, Caribbean public investment has shown a relatively weak link with growth, suggesting the need to increase the efficiency of these outlays. Over the longer term, prospects for growth will hinge critically on the region’s ability to continue to market itself successfully as a tourist destination, to realise incremental revenues from the additional hotel rooms that have been constructed, and to address macro-economic vulnerabilities, including high levels of public debt, Khandelwal noted.
As CWC nears its closing stages, IMF officials said essentially, the net impact of it was unclear, especially in light of the associated fiscal costs to Caribbean countries. It pointed to studies of other states hosting large one-off sporting and cultural events (such as the 2003 CWC in South Africa and the 2002 FIFA World Cup in Korea/Japan), and said these places generally find a small net positive effect .
As an illustration of the bittersweet nature of the Caribbean’s hosting the sporting event, the IMF noted it had brought strong expansion in private sector construction to increase tourism capacity, something that was expected to continue into the medium term.
However, it added, because some private investors had received generous tax concessions in most countries for such investment, this will erode the tax base going forward .
According to the institution, it was clear Caribbean countries had banked on significant economic benefits from CWC, based on the expectations of selling close to 800 000 tickets, a two billion international television audience, and about 100 000 additional (non-Caribbean) visitors to travel to the region.
IMF CWC Warning
Preparations for the CWC have led to accelerated economic activity in the region, particularly since 2005, but have been costly in terms of direct government expenditure and provision of new tax concessions. Five new stadiums were built and others were upgraded, the IMF stated.
Some of the stadiums were financed by grants. Construction costs are estimated at US$250 million and additional public expenditures were incurred on infrastructure (roads, airports, hotels and marinas). Partly as a result of this expenditure, primary balances have deteriorated in most countries, and average public debt remained over 100 per cent of GDP at end-2006 in host countries.
… read the online article at the Barbados Advocate while you can, as that paper does not maintain archives. (link here)
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Barbados Free Press 