NSRL harmful to the economy, warns Worrell

The man who helped guide Government’s monetary policy for a number of years until he was fired earlier this year, has struck the proverbial dagger through the administration’s latest attempts to breathe life into the dying economy.

Former Governor of the Central Bank of Barbados Dr DeLisle Worrell today described the tax measures announced by Minister of Finance Chris Sinckler in his May 30 Budget as “harmful to the economy”.

Worrell said the much hated National Social Responsibility Levy (NSRL), which was increased from two per cent to ten per cent of the customs value of imported and locally produced goods, was nothing more than a “temporary stop-gap” measure which will do nothing to improve the island’s worrying fiscal deficit.

In addition to the NSRL, Government also raised the excise duty on petrol and introduced a two per cent tax on foreign exchange transactions as part of austerity measures to clear a $537 million fiscal deficit.

“Foreign reserves can be expected to fall further, and debt levels will continue to rise,” the former central banker warned in his economic strategy document entitled, The Barbados Economy: The Road to Prosperity, published today.

“The economic impact of such a large increase in the tax burden will be severe. A contraction of real output may be expected in 2017 as a result. The National Social Responsibility Levy (NSRL) and foreign exchange fee are at best, a temporary stop-gap; when they are removed the underlying deficit will re-emerge and will have to be addressed,” he warned.

Worrell said by imposing these taxes without addressing the issue of low productivity, Government had shifted the resources “from the more productive private sector to the less productive public sector”, hence dealing a blow to competitiveness and economic growth.

He estimated that the NSRL and foreign exchange fee would yield no more than $330 million, “taking into account the fact that the new taxes will cause a rise in prices” resulting in a reduction in the purchasing power of residents.   

The International Monetary Fund (IMF) said this week that there was little to no chance that the austerity measures would achieve their desired targets.

More tellingly, the Ministry of Finance, in the draft Barbados Sustainable Recovery Plan 2017 produced in collaboration with the Social Partnership, has also admitted that the burdensome tax was likely to perform weaker than earlier expected.

The fired central banker contended that the May 30 Budget failed to address the causes of the deficit and the slide in foreign reserves, stating that the problem had its roots in “overstaffing and low productivity” in the public service.

Hence, Worrell presented his own formula for fixing the economy, including a public sector reform package, cutting 4,500 jobs from the public service, with separation packages to be funded by international financial institutions, and a ten per cent cut in transfers to state-owned enterprises, all over a three-year period.

He also recommended an aggressive programme of divestment of carefully selected public assets, temporary freezing of all public works, except those funded by foreign finance, and final approval and the commencement of work on major tourism projects.

Additionally, Worrell said the strategy should include negotiating with the IMF, the Inter-American Development Bank, the Caribbean Development Bank and other international institutions “for financial support for a five-year programme of structural adjustment, the centrepiece of which would be conditionalities on the implementation of fiscal reform”.

The economist, who had served as head of the country’s monetary regulatory agency since 2009, was dismissed back in February after he disclosed that the Central Bank was printing in excess of $50 million monthly to fund public sector wages.

He assured that his recommended strategy would result in economic growth of about 1.9 per cent in the first year, rising to three per cent in the fifth year, and increased productivity, while foreign reserves would recover to almost 12 weeks of import cover by the end of the first year, rising to 27 weeks by the end of the fifth year.

9 Responses to NSRL harmful to the economy, warns Worrell

  1. Santini More
    Santini More November 24, 2017 at 10:56 pm

    Judas!

    Reply
  2. Sheldine Dyall
    Sheldine Dyall November 24, 2017 at 10:56 pm

    Hush hush shame bush

    Reply
  3. John Everatt November 25, 2017 at 1:26 am

    So would you people prefer to listen to Mr. Sinclair who has proven himself incapable of controlling the ministry of finance or to Mr. Worrel, IMF and all the other economists in this country. I think I would choose to listen to the educated and trained and experienced economists over someone who has pretended he has the answers yet has failed over and over again. Enough said.

    Reply
  4. Big Man November 26, 2017 at 10:42 am

    This old man that past 65 years long time best by date gone
    Dr DeLisle Worrell go rest yuh self write some books or something nuh
    You saying that the National Social Responsibility Levy (NSRL) is “harmful to the economy” but sending home 4,500 public servants won’t be harmful
    Man Delisle I respected you but it time to rest, take thee wife on a Panama canal cruise
    Let it go now move on

    Reply
  5. archy perch November 26, 2017 at 2:52 pm

    This short Mugabe style man is like a bad dream that won’t go away. Imagine he banned press conferences when he was at the Central Bank and some of the things he now says he never considered before. Man stop playing politricks and find dancehouses to wukup in. I realized you were playing the political game when you got Gregory Nicholls to be your lawyer you joker.

    Reply
  6. Nathaniel Samuels November 26, 2017 at 9:20 pm

    Archy Perch, Santini More
    Do you really think that Mr. Worrell would not have been telling Mr. Sinckler that there was a problem in the economy? I would not consider him a Judas as I believe he was telling the joker Sinckler all along about it which Sinckler really could not and cannot comprehend.
    How on earth this man can be the minister for so many years and oversee the many downgrades and he cannot be changed shows a lack of concern by our other joker, the prime minister for the people of this country.

    Reply
  7. Tee White November 27, 2017 at 9:17 pm

    The workers must oppose all attempts to force them to pay for Barbados’ economic problems

    The former governor of Barbados’ Central Bank, DeLisle Worrel, has added his voice to a growing chorus calling on the governnment to intensify its attacks on the workers of Barbados in order to allegedly ‘solve the country’s economic problems’ and put it ‘on the road to prosperity’. Mr Worrell, with a callous disregard for his fellow Bajans declares that the measures that are needed include sacking 4500 public sector workers and reducing government support for state owned enterprises (SOEs) by 30% over a 3 year period. In addition, he calls on the government to ‘seek the support of the IMF and other international financial institutions…….to oversee a comprehensive programme of public sector reform’. Therefore, for Mr Delisle, the road to prosperity for the people of Barbados begins with making 3% of the labour force unemployed and increasing unemployment by 30%. What the further consequences would be for the working class as a result of his proposed 30% cut in government support for SOEs and the IMF’s comprehensive public sector reform programme, Mr Worrel prefers not to say. Nor is the fate of the sacked workers and those who are dependent on them his concern.

    Mr Worrell identifies two roadblocks to Barbados’ economic prosperity. The first he states is the low level of the foreign currency reserves which in his view undermines ‘investor confidence’. He states that the fall in the foreign currency reserves from BD$1.4 billion to BD$ 600 million over the last 4 years has resulted from the government’s need to draw on the foreign currency reserves in order to cover the cost of imports. What Mr Delisle fails to explain is that the unsustainable import bill of BD$ 3 billion in 2016 is a direct result of the continuation of the colonial economic policy in ‘independent’ Barbados. Instead of seeking to develop a varied economy with a high level of self reliance, the ruling elite transitioned the country from the one crop sugar cane plantation economy to a new one crop tourism plantation economy. Therefore, it is precisely this suicidal economic policy of making Barbados into a tourism and services economy that produces very little in the way of agriculture or manufacturing that has created the situation that he laments, namely that “As people spend their income on food, clothing, transportation and other necessities, they generate a demand for imports”.

    The other block he identifies is “the inefficiency of government bureaucracy”. Like his IMF mentors, Mr Worrell speaks of the Barbados economy as if it was made up entirely of the government’s income and expenditure. However, the statistics show that the government claims some 33% of the country’s GDP as taxes while the other 67% is divided into profits for the owners of capital and debt and into wages and salaries for workers. How can the ex-central bank governor possibly think that you can make a balanced assessment of the economy by ignoring two thirds of it? But even if there is a need to reduce government spending, why should this be done at the expense of the workers? There are many other items of government expenditure that could be cut to achieve this goal. For example, the government is currently spending BD$1.7 billion servicing debt and a moratorium on debt repayments would immediately bring the budget into balance. There are also the corrupt outsourcing contracts, such as the one with Mr. Bizzy Williams’ Sustainable (Barbados) Recycling Centre Inc. (SBRC), under which the government is obliged to underwrite a guaranteed minimum payment of $22.6 Million per year to SBRC over a 20 year period for the processing of solid waste at its landfill site. However, Mr Worrell has no interest in these items of government expenditure. His focus is on making sure that the workers pay for the economic crisis created by the policies of the ruling elite.

    The workers must oppose all attempts to force them to pay for Barbados’ economic problems.

    Reply
  8. hcalndre November 28, 2017 at 7:32 pm

    Mr. Worrell is another one of the lizards that I always speak of. You`ll know a lizard changes its color depending on where it is, now that Worrell is on another side, he changes his tune.

    Reply
  9. pat November 28, 2017 at 8:54 pm

    idea: reduce ban on cannabis plant to stimulate economy

    Reply

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