Private sector wants to sit with Gov’t to plan the restructuring of state enterprises

The Barbados Private Sector Association (BPSA) is pleading with government to convene an urgent meeting with that organisation and labour to devise a restructuring strategy for state-owned enterprises (SOEs) to stop the “fiscal bleed.”

The appeal was made on Friday by chairman of the association Trisha Tannis as she responded to the Central Bank’s first-quarter economic review for 2022, which, among other things, reported an 11.8 per cent growth in the economy during that period when compared to the corresponding time last year.

While welcoming the growth, Tannis expressed concern about the ongoing impact which the funding model of the SOEs is having on government’s slender finances.

She said while the government has already signalled its strategic intent to be a lot more urgent in 2022/2023 to re-engineer those state-owned enterprises, this is not enough.

“We do think that now, we need a strong and structured plan, timelines…and we do now need to sit down with the help of the BPSA and labour and the wider stakeholder map, lending our relative competencies to assisting in restructuring of the state-owned enterprises, so that we can stop the fiscal bleed and bring more efficiency and productivity and effectiveness to the delivery of services to the state-owned enterprises while generating sustainable revenue,” the private sector leader stated.

Tannis suggested that such a meeting of the stakeholders could also consider if the SOEs are serving the purpose for which they were originally intended.

Of equal concern to the private sector is the perennial problem about the ease of doing business in Barbados, which Tannis contends continues to make this island uncompetitive as an investment domicile.

“This is an issue that concerns the BPSA as it relates to the ease of doing business and our business facilitation and the fact that we are still internationally relatively uncompetitive. It is an issue that needs to secure the most urgent attention, even though we know that the World Bank has discontinued its dashboard; certainly that is not an excuse for us to retire or lay back or decelerate our efforts as it relates to tangibly moving the needle and making ourselves accountable to our own economy and moving those hurdles down,” she said.

Tannis also suggested that the country must pick up the pace of dismantling all the obstacles to seamlessly doing business in Barbados, to create the required efficiencies, improve output and productivity which in turn would drive down costs.

“Once we start doing that then the cost of living starts to follow suit and drive downward as well,” Tannis declared.

Regarding the near 12 per cent economic growth announced Thursday by the Central Bank, Tannis said it came as no surprise to the private sector.

“As we know we have the impact of the lockdown in the prior year and that would have given rise to a national adjustment upward in 2022. But we also would not want to minimise the real and tangible impact of the improved tourism sector and the impact that it’s been having on the economy that is no doubt contributing to that percentage growth,” the BPSA chair said.

“We are watching, and still very, very concerned about the large external shocks and the internal management of course, of the ongoing COVID-19 pandemic and the decisions that we are making around that public health crisis that continue to dampen the economic recovery to some degree,” Tannis pointed out.

She said the business community is also worried about the geopolitical shocks on top of the supply chain challenges that countries have had, as they try to emerge from the lockdowns of 2020.

“We are concerned about the escalating risein the cost of living that we here are experiencing. We do know that it is likely to stabilise; we agree with that outlook from the Governor of the Central Bank, because we are seeing it, certainly in the retail and distributive sector. That is what our own companies and our stakeholders are predicting as well,” Tannis disclosed.

She noted that the government had taken the action it could “afford” by capping the freight costs on goods coming into Barbados.

“Consumers may be very well wondering why in spite of that cap on freight costs, why is there still an increase in the cost of goods and services on the island? One only then can imagine that if we didn’t have those mitigating actions, that the costs would even be more austere and more severe and more pronounced,” the private sector association chair argued.

However, the business leader admitted that there is still cause for concern in the country.

“I don’t think that the job is done yet in terms of us sitting down and contemplating and deciding and discussing what more can be done, if anything, to try to mitigate that impact even further,” she added.

Tannis also welcomed the Central Bank news that unemployment among females has dropped.

“We also noted very favourably that female unemployment has now regularised and it has reduced. We do take that as a signal of the number of females that are employed in the tourism sector because we know that female unemployment had actually out-stripped male unemployment coming into the latter parts of 2020/2021. Therefore, we think that the regeneration and resuscitation in the tourism sector has had a very positive impact on female unemployment in particular and unemployment on the whole,” the BPSA head said.

She is looking forward to that reduction in joblessness benefiting the economy throughout 2022 to improve disposal income flows across all sectors.

“What is concerning of course continues to be the excess liquidity in the market. This speaks to an even low investment climate and low investment appetite, certainly at a grassroots level and across the board and a wider economy, notwithstanding the fact that we have large companies and large investors making applications and plans for large construction, particularly the renewable energy sector,” Tannis pointed out.

The business leader contended that the excess deposits to loan ratio indicates that the country has a challenge in terms of the use and turn of capital in the economy.

Acknowledging that there is stagnancy in capital flows, Tannis sees the need for all stakeholders to work together to improve the investment opportunities for Barbadians to use their funds which are currently sitting dormant in the financial institutions.

The Central Bank Governor Cleviston Haynes said in his review that with Barbados already recording 11.8 per cent growth during the first quarter, he is forecasting that it will end the year with double-digit figures

However, he said that this continued strong economic expansion will require several urgent measures to mitigate the tasks.

He said that in order for Barbados to reduce its economic vulnerability, there must be improvements in food and energy security, strengthening of resilience to climatic events over the medium term and enhancement in the island’s competitiveness.
emmanueljoseph@barbadostoday.bb