More cuts

Public sector still too large, warns Central Bank Governor

Barbados currently exists beyond its means with an inefficient and still-too-large public sector the biggest drain on the public purse, says an unrepentant Governor of the Central Bank of Barbados Dr DeLisle Worrell.

Dr DeLisle Worrell

The economist said Government was simply not earning enough to meet its obligations, forcing the Central Bank to finance the administration’s programmes.

Therefore, in order to “eliminate” the deficit the Freundel Stuart administration must either raise taxes or send home even more public servants, he advised.

“. . .  our public sector is a break on our growth. It must be reduced in size to what our taxes can afford,” Worrell said during last night’s live television broadcast of the Central Bank’s economic forum, It Matters Fiscally.

The administration’s chief monetary adviser left little doubt that he would rather see an end to the printing of money by the bank to cover basic bills such as public servants’ wages.

However, in order not to “cause a disaster in the economy”, the Central Bank must come up with $50 million every month to pay public workers because the tax collection agency, the Barbados Revenue Authority (BRA) was not earning enough to cover the monthly bills, he said.

Governor Dr DeLisle Worrell warned that the printing of money was unsustainable during last night’s live television broadcast of the Central Bank’s economic forum, It Matters Fiscally.

“On the week on which Government workers are paid, we always know that in addition to all the other expenses, we have to find $50 million approximately to pay Government wages. That is why the amount the Central Bank lends always go up on that week because BRA does not bring in enough money to meet Government salaries during salary weeks,” Worrell revealed.

“That is why the current account deficit has to be eliminated, not just reviewed. Government has to live within its means on an ongoing basis.”

This cannot be good news for the island’s 20,000-plus civil servants who have not had a pay rise in over six years, and for whom the labour unions have requested double-digit increases.

When it emerged last June that the ruling Democratic Labour Party administration would move to restore the ten per cent cut from the salaries of parliamentarians and senior public servants in 2014 at the height of austerity, the National Union of Public Workers said it would demand a 23 per cent hike, while the Barbados Workers Union said it would ask for a 15 per cent pay rise.

Stuart had responded that he would not rule out the possibility of an increase, but warned that his Government would not embark “on a carnival of spending”.

Just over a week ago, Parliament approved the pay restitution despite Opposition protests.

Worrell made no mention of any of these issues last night, but for the first time he appeared to have totally discarded of his practice of toeing the administration’s line as he exposed the country’s dire fiscal state.

Still, the senior economist maintained the local economy was improving, pointing to the strong performances of tourism, international business, rum exports and the solar energy sector.

However, he gave his frank assessment of the public sector, saying it was “completely out of sync” with the “dynamic economy”, too slow to act and “the running costs of public service exceeded tax and other revenues by a wide margin”.

“The majority of public servants are well trained and able and committed to the public good. They do an exceptional job, but too many in the service are inefficient and uninvolved and they treat citizens of this country and our visitors with disrespect,” he said during the 90-minute programme in which he assured that the Barbados dollar was “a long way” away from devaluation, but was not out of danger.

“If we don’t stop eroding the foreign exchange we will get there,” he warned.

“Having your own currency is better only if you are able to exercise the necessary fiscal discipline in order to maintain that value unchanged. If you are unable to do that you are better off with the US dollar.”

Earlier this month Worrell revealed that the foreign exchange reserves had reached a 14-year low of 10.3 weeks of import cover.

He also dismissed suggestions that the private sector was not doing enough to promote its products and services overseas, saying it was being held back by “the inefficient public sector” that was “hindering things the private sector wanted to do”.

Meanwhile, economist Winston Moore said besides cutting wages and salaries or reducing the size of the public service, Government must consider other areas of reform, including its electricity costs.

He also suggested that Barbadians must be allowed to invest in state entities as Government considers selling some assets.

“The issue of privatization is not a bad word. Privatization actually provides opportunity for innovation and competitiveness and it is something we need to consider in Barbados as well,” Moore said.

Panellists also called for greater emphasis on the expansion of the green and renewable energy sector, improved productivity and an end to Government bureaucracy.

marlonmadden@barbadostoday.bb

14 Responses to More cuts

  1. James Austin Bynoe
    James Austin Bynoe February 3, 2017 at 11:38 pm

    This is either pre-IMF or pre-devaluation political posturing.

    “Especially if the funds for key projected promised don’t materialize …. soon”

    After years of “well” put together and misleading politically driven economic updates …

    I guess it’s time to start coming clean …

    Reply
  2. Santini More
    Santini More February 3, 2017 at 11:44 pm

    So with the public salary bill exceeding Government income, this is probably not the best time for DLP politicians to demand back their 10% austerity salary cut.

    Reply
  3. Alex Alleyne February 4, 2017 at 4:47 am

    Let’s start by cutting the MP’s. Too many of them just collecting big $$$$$$.

    Reply
  4. Tony Webster February 4, 2017 at 5:54 am

    Hmmm….Kelly cud perhaps mek de cut for de a new Guv? Naaah…give Chris dat…to see what a pressure-cooker dat is… and mek Kelly Minister of Fiscal things? Effin you likes ultimate thrills…like riding dem rollercoaster things…we cud try Froon as Min. Finance…Kelly as P.M., and Jepter over at Church Village.

    Yes, Lord…I dun tell ya dat dese is “interestin’ times”…interesting…but surely …not funny at all.

    Reply
  5. harry turnover February 4, 2017 at 6:04 am

    DEM would have been pleased as punch if the year was 2018 .They would have been telling themselves that all they have to do is to hold on until March and then let the BEES deal with that.
    …..but the PM ..a man who likes to pompaset as Prime Minister would now have to decide whether to call elections BEFORE they are due to prove the MOF right (devaluation under the DLP ) or hold the reins and inflict more pain on the people and the BLP
    The GOC apparently is seeing something at the end of the tunnel or around the corner and is trying to convince himself that he is only now seeing it.
    Over to the resident paling cock C C C who will now jump up and keep a lot of noise.

    Reply
  6. jrsmith February 4, 2017 at 6:28 am

    My take always make the comment, how a little island as barbados have such a large non productive political infrastructure, The question nothing in Barbados works, which involves politicians… (what do they do ).. all party people do is to vote to secure politicians jobs for a term..doesn’t matter they dont do anything so long the party is in power thats fine…

    The public sector in barbados fails decade after decade , its so easy to see why a majority of management have no idea as to what to do in the positions they are in , because the job is a party position and this goes on and on and on…

    Reply
  7. Richard Johnston February 4, 2017 at 8:09 am

    Among the first actions is to reduce by 50% the number of MPs.

    Reply
  8. WatchfulWarrior February 4, 2017 at 9:13 am

    And now is NOT the time for politicans to ask for their money either… while you are at it.. STOP buying new cars… reduce the allowances to all heads of departments, ministers, permanent secretaries and senior staff…
    Next.. make departments accountable for their spending..Budgets need to be followed to the cent
    Next… stop all misappropriation of funds..aka..stealing…
    Methinks that should keep some people employed for a while dont you…

    Reply
  9. Greengiant February 4, 2017 at 10:15 am

    The first action is to get the lawyers out of parliament. We’ve had an over weight public sector for decades now. You people who come here so often to champion the cause of your B L P and DLP need to finally admit it’s time to move on to a different approach to managing the affairs of this country.

    They both sell the country to their election campaign finances at the peril of the voting masses, then return five years on with their cash for votes scheme. You don’t confront them during constituency meetings on their failings, you don’t call for their resignation and anyone who is bold enough to do so is marginalised by the very persons who’s interest they’re representing. Our issue is not with a party in government but with the way our country has been governed by both parties.

    Reality is that both parties have sold the calf cheaply to their partners during their years in office. Remember there was a wage freeze during the better part of the B L P years in office. They too left office with a swollen public sector, high foreign depth, and borrowed foreign reserves. The DLP has governed with a swollen public sector, high foreign depth, and low reserves because they can’t get good borrowing rates. During the BLP period their Central Bank discount jockey was Marion Williams the DLP has Delisle Worrell. The hymn sheets are old so the songs from the central bank remains the same. If you too don’t think that we deserve a break from this style of governance then maybe I should see Dr. Nigel Barker early on Monday morning. Let’s support a new party next year. This move at least will send both leading parties into the wilderness to find themselves a new ideology before expecting the people’s support again and of course this will depend on the performance of the then government.

    Reply
  10. Donild Trimp February 4, 2017 at 1:45 pm

    Wait a minute, I have been saying the same thing for a while. I pointed out Barbados was operating just like a banana republic.

    “too many in the service are inefficient and uninvolved and they treat citizens of this country and our visitors with disrespect,”

    “the running costs of public service exceeded tax and other revenues by a wide margin”.

    “BRA does not bring in enough money to meet Government salaries during salary weeks,”

    I applaud Dr.Worrell for going public with this information.

    Also applaud Winston Moore for his take on privatization. Right now Barbados is a hopeless wreck.

    Barbadians should stop burying their heads in the sand because sooner rather than later the s*** is going to hit the fan and all you are going to end up with is splattered s***.

    Reply
  11. BaJan boy February 4, 2017 at 3:44 pm

    Donald Trimp you should have used the U instead of the I as you seem to be the same cu#€ as the original Trump..Barbadians heads are no where near the sand probably it is your head near the place where short men’s head usually find itself. You said you were saying it for a long time and now the Govenor is saying it. Wasn’t it Owen Arthur who officially said it back in 2012 and people like you and Freundel Stuart made a mockery of it and are all now too shame to even call the word privitization. The BLP will rescue Barbados again as Arthur did in 1994..

    Reply
  12. Donild Trimp February 4, 2017 at 4:21 pm

    BaJan boy, your head is really in the sand.

    FACT: “Government was simply not earning enough to meet its obligations”

    FACT: “in order to “eliminate” the deficit the Freundel Stuart administration must either raise taxes or send home even more public servants”

    FACT: “. . . our public sector is a break on our growth. It must be reduced in size to what our taxes can afford,”

    FACT: “He also dismissed suggestions that the private sector was not doing enough to promote its products and services overseas, saying it was being held back by “the inefficient public sector” that was “hindering things the private sector wanted to do”.

    FACT: “Worrell revealed that the foreign exchange reserves had reached a 14-year low of 10.3 weeks of import cover”.

    Those are all facts so if you want to pretend that all is well and dandy in good old Barbados, all I can say is KUDOS TO YOU.

    By the way, my name is Donild not “Donald”.

    Reply
  13. Julie February 5, 2017 at 6:38 am

    The PM has no choice but to call elections early or take the pressure. First he needs to trim his cabinet. Some older public servants don’t mind going home. Outhouse near to retirement. Give them their monies and let them go. Also close some of those statutory boards which waste government monies. They spend as they like with no one to control them

    Reply
  14. Narcissus February 8, 2017 at 8:55 am

    Fact is, it was said by a minister, that most of the same ppl they sent home now back in the service, so what do you expect. Always on about public sector when even before a public servant get paid their taxes done out. How many self employed ppl pay their taxes…..painters, labourers, masons etc. ( Not saying some don’t).

    Reply

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