Our Governor’s welcomed economic epiphany
After listening back to Central Bank Governor Dr DeLisle Worrell’s presentation last night on national television, it is hard to see how Government will be able to afford a 23 per cent, 15 per cent or even a two per cent wage hike for public servants this year.
The fact of the matter is that the Freundel Stuart administration’s spending is still way too high.
We would therefore wish to caution Government against making any false promises to either the National Union of Public Workers or its sister union, the Barbados Workers Union, that seem virtually impossible to keep, given its already bloated debt, worrying deficit and the fact that its foreign reserves are already running quite low.
In such an environment, we would like to humbly suggest to Minister of Finance Chris Sinckler that he should sooner call those parties together, and take them into Government’s confidence for a more sober discussion centred on how the entire nation can put its shoulders to the wheel to pull our beloved country out from the deepening financial hole in which it finds itself.
Mindful of the deficit, we would have already voiced our strong displeasure over the actions taken by Government legislators just over a week ago in terms of restoring the salaries of parliamentarians and other senior state officials on the grounds that its 18-month austerity programme has all but ended.
But it bears repeating, based on the now unmistakable warnings by even the Governor himself, that that programme has failed and that we are basically none the wiser in terms of our “current account deficit”, which Dr Worrell maintains must be eliminated.
Therefore, there cannot be any form of reasonable excuse for expansion of the public service wage bill at this time; be it in the form of an overt pay hike or covert pay restoration, which is what our Government would have treated itself to, even in the face of repeated warnings that its expenditure is already out of whack.
Which brings us to the issue of printing money.
As the Governor rightly said last night: “We cannot continue to have a deficit and we cannot continue to have a wage bill as high as we are, simply because the only way we are able to do that is by the Central Bank providing financing.”
It was as if the Governor was deliberately throwing his immediate boss under the proverbial bus.
But for good reason, if ever there could be one, Dr Worrell has been at pains to point out that approximately $50 million in monthly wages is far too much for Government to afford at this time, given what he knows about what it is raking in terms of taxes and revenues to meet its current costs.
Though not prepared to tell the Minister of Finance ‘no’ for fear of not meeting the monthly commitment to pay public servants, it seems as though the Governor is no longer prepared to shy away from the widely-known economic truth, which is that his printing of money is simply “unsustainable”.
“That is why the current account deficit has to be eliminated, not just reduced,” he said during the Bank’s economic forum on state-owned CBC TV last night.
With the eyes of the country staring back at him, Dr Worrell was equally adamant that Government must live within its means on an ongoing basis and that it must generally operate as ordinary householders do, in terms of its spending.
Therefore, “if you are earning $2,000 month, you cannot be spending $2,500 a month,” he suggested to the Democratic Labour Party-led administration.
It was his first public performance in a long time that did not seem clouded by political spin as he discussed the nuts and bolts issues in a way that almost made us believe that he was again warming up to the possibility of holding authentic quarterly engagements with the media.
Too bad his economic epiphany seems had to come so late in the day, with the reins fully broken, and Government having long bolted its spending gates, while the political chickens sit at home waiting to roost.
But with the economic ball now in Mr Sinckler’s court, it remains to be seen if he will take on board the Governor’s sound advice and cut back on spending for the immediate sake of our foreign reserves and ultimately for the sake of all of us. God forbid he should decide to adopt the same temperament as US president Donald Trump, who, when challenged by his acting attorney general Sally Yates last week on his executive order banning entry for citizens of seven predominantly Muslim countries, including refugees, chose to cut off the head of the dissenting messenger.
Time certainly will tell.