We will stay the course, assures Sinckler
With the date for the national budget due to be announced here next week, Minister of Finance Chris Sinckler today assured that Government would be sticking to its fiscal consolidation plan.
The assurance came at the conclusion of the International Monetary Fund’s (IMF) Article IV Consultation, during which the IMF warned of the need for further reform of the public sector and for the Freundel Stuart-led administration to bring down its high wage bill.
Sinckler told Barbados TODAY that the Government would be pressing ahead with its attrition plan.
He acknowledged that even though the economy was starting to show positive signs of recovery and growth, it was “nowhere near where we need to be”.
“… but at least it is going in the right direction,” he quickly added.
“We are not out of the woods yet. The job is not over. We need to continue to forge ahead with the Fiscal Consolidation Programme, so as to bring that deficit down to a more manageable level, to stabilize debt growth and eventually have that going on a downward trajectory,” Sinckler acknowledged.
He said the ruling Democratic Labour Party-led administration was committed to the task that lies ahead, while pointing out that it had been able to reduce the overall deficit from 11.2 per cent of GDP in 2013/2014 to about 6.6 per cent at the end of 2014.
Sinckler said that going forward there should be no mass layoffs, even as Government seeks to put a rein on its wages bill.
“We are trying to hold to that, but what we said would happen over the next five years, starting from 2014, is that we would be going to an attrition policy and locking that in.
Therefore, he explained that where positions became vacant in the public service, “we would not be filling those positions unless they are absolutely central and critical”.
“We will continue that, and it is through that we expect to get modulation of the wages bill and so we are going to continue with that,” said Sinckler.
Government is also scheduled to pursue a programme of reform of state agencies.
In this regard, the Minister of Finance said there would be some operational mergers and some functions would be phased out, resulting in savings “as we streamline functions and make sure there is no duplication of efforts”.
“So on those two ends you will see a situation where the wages bill will be contained, but as to the mass layoffs that we had before, we are not contemplating going that route at all,” he stressed, in the wake of fallout suffered as a result of its decision to lay off some 3,000 public servants last year.
Zeroing in on his most recent meetings with the IMF, the Minister described the talks as “reasonably good and positive”, saying the IMF team seemed “reasonably assured” that the Government’s 19-month fiscal consolidation work “has been good”.
With the final report still to be written, he also reported that the IMF was pleased that Government was able to bring its foreign exchange levels back up to an acceptable level.
In relation to subsidies to some departments, particularly health care and welfare services, Sinckler said it was now a question of getting those departments to be more efficient and ensuring that Government was able to manage its costs while the highest quality care was being administered.
He also gave the assurance that the Government would not be rushing ahead with any decision regarding changes within the health system.
“It means that a public discourse has to take place on the long term funding model for public health care in Barbados,” he said.
Sinckler explained that the Government was cognizant of the increasing cost of health care and it now had to find a way to “successfully and substantially meet those costs” while ensuring that high quality care was maintained.
“So things like public education, public health care, things like sanitation and waste management, these are the big ticket items that draw substantially on the resources of central government, that we have to bring a level of sustainability to,” he said.
And while he acknowledged that Government arrears to the private sector had reached “an uncomfortable level”, Sinckler pointed out that individuals and private sector arrears to Government had also reached considerable amounts.
“The two need to be dealt with conjointly and consistently over the shortest period of time,” he said.
He praised the Barbados Revenue Authority (BRA) for raking in approximately $190 million more in revenue for Government since its establishment, but warned that it would take some time before the revenue collection agency could become as efficient as expected.
“We have to strengthen their hands and built their capacity to be able to do that work,” Sinckler said, explaining that “a lot relates to the IT platform so as to make the system more integrated and user friendly”.