Cut the waste, Govt told
The Freundel Stuart administration is being told to continue to focus on cutting its spending if it is to realize positive changes in the local debt and fiscal deficit situation.
This advice has come from economist Ryan Straughn, who told Barbados TODAY that pension reform was also needed.
Straughn’s comments came in the wake of a call from Minister of Finance Chris Sinckler yesterday to rich countries to grant struggling Caribbean nations “no less favour than that which was given to the HIPC [Highly Indebted Poor Countries] during the 1990’s”.
Sicnkler acknowledged that Barbados and the rest of the region continued to struggle with their debt.
Government debt rose to about 101 per cent of GDP at the end of March this year.
“We need to stop spending. That is what we need to do. We need to stop wasting the money. As a matter of fact, we just had a discussion in Parliament regarding the building of [accommodation] for police officers using money from the NIS,” said Straughn.
In Parliament on Tuesday the Government got approval to borrow $76 million from the National Insurance Scheme (NIS) for refurbishment and constructing new accommodation for members of the Royal Barbados Police Force (RBPF) and the magistracy over the next two years.
Asked if he believed Barbados could qualify for debt relief, Straughn said he was not sure the country fell into that bracket, given that a lot of its debt was domestic. He said this could impact the NIS and other programmes, including Government bonds.
However, he said countries such as St Kitts, Grenada and Haiti would perhaps be at the forefront for debt relief because they were heavily impacted by natural disasters and had to borrow internationally to rebuild.
“There is some level of legitimacy on that front. I don’t think we are in that same position. Any debt we have is strictly of our own making. So I am not convinced that debt relief . . . without fundamental changes in the way monies are spent in Government would not necessary yield the right results for us,” explained Straughn.
In June Governor of the Central Bank Dr DeLisle Worrell reported that during the first three months of the fiscal year 2015/2016 total expenditure fell by approximately $4 million. Spending on goods and services decreased by $14 million, and wages and salaries fell by $2 million.
There was no increase in transfers to public institutions, while interest payments and outlays on capital expenditure grew by an estimated $8 million and $12 million respectively. Total revenue was lowered by $33 million.
Acknowledging that the administration had already “seemingly started dealing with transfers and subsidies”, Straughn said Government should also keep a check on its spending on goods and services, as well as wages and salaries.
“The fundamental thing is the spending of Government and what they are spending on, the size of Government and the efficiency of Government need to be corrected.”
In terms of pension reform the economist suggested that was an area where public servants would have to contribute directly to their own pensions.
“I guess like . . . in the private sector, depending on how it is set up, some encourage voluntary contribution whereas some [make]it is mandatory. Some pension reforms will have to be put in place for public servants in order to reduce the spending going forward,” said Straughn.
He also noted that Government needed to employ greater use of technology in order to become more efficient while opening up opportunities for private enterprises to offer goods and services to the Government.