Don’t rule out privatization!
This was the stern advice issued Wednesday by this country’s Chamber of Commerce and Industry (BCCI), as it reacted to the latest Central Bank report.
President Eddie Abed said the report was further evidence that Government’s economic policies were clearly not working, while suggesting that expenditure cuts were the only way to reverse the current fiscal slide.
“We have been extremely forceful that Government must close the deficit by cutting their spending. There is no other way to do it. They must cut their spending and there are several options available currently. However, in the future there may not be any [options],” the businessman warned.
He suggested that Government should embark on more public/private partnerships as a precursor to full privatization of any of its assets.
“The private sector brings a certain amount of maturity and discipline in fiscal measures and perhaps that management aspect of it might be needed,” said Abed, who also recommended the introduction of user fees for public services as a means of increasing state revenues.
His comments came against the backdrop of robust debate in recent weeks about privatization of the state-run Sanitation Service Authority (SSA). However, Minister of the Environment Dr Denis Lowe Tuesday night put paid to any such discussion when he told Parliament that divestment of the SSA was currently not on the cards.
Nonetheless, Abed dared to raise the dreaded ‘p’ word again Wednesday as he responded to some of the more grim aspects of Central Bank Governor Dr DeLisle Worrell’s third quarter economic report.
For one, the businessman took issue with the fact that Worrell has had to further reduce his near two per cent growth projection for 2016, pointing out that the Chamber had earlier voiced concern that it was “inordinately high”.
“And if you start with the wrong premise, you are going to end with the wrong result,” the BCCI president warned, adding that “our expectation all along was that the growth was never going to be [in the region of] two per cent. It was probably more around 1.5 per cent, in line with what the Central Bank is [now] saying.”
Abed also warned that Government’s ability to cover its expenditure through taxation was diminishing.
“With that comes the understanding that if the economy is not growing as quickly as anticipated, you are going to end up with a situation where the tax dollars you intend to recoup are never going to come to a realization. So here we have a situation where we can only expect another deficit this year,” he said.
He also pointed out that while “the quantum of deficit as a percentage in GDP may be less than last year, there is still a hole in the [Government’s] bucket . . . and the way that we have been making up the shortage is by printing dollars.
“This is just not sustainable. This is driving us closer to the point of no recovery,” he added.
Between April and September of this year, $114 million was printed by the Central Bank in support of domestic financing.
The private sector boss also suggested that Government should draw on the skill sets of knowledgeable persons in both the public and private sectors, to chart the best course forward. He also strongly criticized Government’s tax strategy.
“You can’t put more weight on a galloping horse and expect the horse to run the race. Private sector is what grows the economy,” Abed said.
“We have said all along that we want Government to facilitate to create environment through which companies can grow and by extension raise their revenues, raise the taxable dollars, employ more people, give opportunity to school leavers and generally move this country in the right direction. You can’t continue to tax our way out of this problem, you must cut the country’s spending,” he added.