Government’s decision to send home thousands of public sector workers should be seen as a “right-sizing” of the public sector. This suggestion has come from Governor of the Central Bank of Barbados, Dr DeLisle Worrell, who told journalists today there was “national consensus” that the current size of the Government service was “undesirable”.
He said Government was currently spending more than one-third of the gross domestic product on its operations and this level of expenditure was not as a result of the current economic crisis. “That is the situation. The Government’s expenditure is more than one third of the GDP, and that is too much,” said Worrell.
“[It] is something that we have always had to address, so we need a smaller Government and a more efficient Government, a Government that is able to do the things and to operate with speed and efficiency that the 21st century demands of our Government institutions,” he stressed.
The Freundel Stuart-administration, which announced last December plans to send home in excess of 3,000 workers by January 15, is now slated to begin the process by the end of this month, in a bid to reduce its overall costs.
While stating that there should be no cause for concern regarding Government’s decision to delay sending home the workers, the top economist said the delay was “undesirable”, adding that the process should be done in the most humane way possible and consistent with the relevant laws.
He acknowledged that the move would lead to some contraction in the privatesector, resulting in a reduction in imports.
“There will be some spin off [effects] and we factor that into our estimates when we try to determine what target there should be for the fiscal consolidation,” said Worrell.
However, he is still hopeful of “private sector-led growth that will, to some extent, compensate for the contraction”. Overall, the Governor is not anticipating any further leakage of foreign exchange reserves, which have fallen from 19 weeks of import cover to 15 weeks, as at December 31, 2013. “The strength of our policy arrangement is such that when we detect something like that we take decisive action and everybody agrees, the private sector [and] the IMF [International Monetary Fund], everybody agrees that the action that we took in August [last year], reinforced by what we have done in December, is the appropriate action,” said Worrell.