The options available to the Government of Barbados to implement some kind of fiscal consolidation measure are slim.
And while Richard Francis, senior analyst at
Standard & Poor’s stressed that he was not in
a position to give advice or make suggestions to the Government, he agreed that one sure way of cutting expenditure was through cutting public sector wages.
Government is expected to make an announcement soon on the future of hundreds of the island’s public sector workers.
To stave off any further downgrades, the Freundel Stuart administration must examine the available options and move quickly to implement measures aimed at increasing revenues and cutting expenditure.
In an interview with Barbados TODAY,
Francis said the recent S&P downgrade of the
Barbados economy from BB+ to BB- with a negative oudook. meant the island would be assessed within another six months to a year.
“What we are looking for is a fiscal
consolidation in a timely manner. How the Government goes about doing that is not for us to say,” Francis remarked.
He said, however, there was need for a fiscal adjustment programme, and for Government
to recognize the need for external financing because of its relatively large current account deficit.
“So if you look at the area where the
Government has room to cut, one of the key areas would be some kind of cuts either on the wages and salaries or transfers and subsidies
which would go mainly to the statutory bodies …. I am just making references to the possibilities that the Government has,” explained Francis.
He said the Government had the option to either “make cuts in salaries or lay off public workers, merge some of the statutory bodies,
or make cuts in goods and services”.
“It can cut back on capital expenditure, and
there is not a lot of room for that either. So those are the kind of the options on the table in terms of a fiscal consolidation,” said Francis.
Adding that the Barbados economy
depended gready on tourism, Francis said it was
also critical that major construction projects were resumed.
He said there was need for an update on
“hotel projects especially, and projects in
general, where they stand and if they are able to get them off the ground. The new sandals
project and the four seasons hotel as well as the
others; the marina and other major projects”.
“What is clear coming from our perspective
is, given the state of the balance of payments
and the falling reserves, external financing of any
sort is needed basically,” said Francis.
He said while time had not yet ran out, the Government did not have unlimited time left either to implement the necessary measures. Francis said S&P would like to “see Government make some announcement of implementation
of measures which were already presented
in the Budget”.
He said: “There is slow implementation in
terms of the taX measures …and it remains what is to be seen on the expenditure side. So we will have to see where they stand.” [email protected]