If he were still the Freundel Stuart-led Democratic Labour Party (DLP) Government’s chief economic advisor, former Chairman of Government’s Council of Economic Advisors Sir Frank Alleyne would tell the administration it must privatize some state entities.
Addressing Friday’s DLP lunchtime lecture on Fiscal Consolidation in Small Developing Economies at the party’s George Street, Belleville, St Michael headquarters, Sir Frank said privatization should not be brushed aside as Government seeks to cut expenditure and reduce its deficit.
“Privatization should never be put aside. This economy we are in is a mixed economy. Therefore, my view is that productive investments should be left to the private sector. They are best able to do that,” Sir Frank said.
Over the past five years Minister of Finance Chris Sinckler has been advised by all manner of accountants and economists of the need to look seriously at selling off a number of loss-making state entities, including the country’s lone television broadcaster, the Caribbean Broadcasting Corporation, and its primary garbage collector, the Sanitation Service Authority.
While Sir Frank did not go into detail as to which entity should be placed in the hands of the private sector or how soon, he made it clear Government should divest some entities while holding on to the role of regulator.
“Government’s strength is in regulation. Sometimes Government will have to play the leading role in getting something [developed], but as soon as you get that idea firmly planted and developed it becomes what you call a demonstration. This is what is possible. Once you have done that you should get rid of it. Don’t hold that investment which should probably be in the private sector because what you are doing is using the private sector people’s money, my money and your money to compete against us,” the respected economist explained.
Just last November Sinckler said Government had not shut the door on privatization, though making it clear that some services would remain under the control of the state no matter what.
Sinckler maintained that the idea of placing some state entities in the hands of the private sector would only be considered in areas where it was viable to do so.
“The Democratic Labour Party Government has never accepted privatization in its entirety. In instances where privatization could work and be viable, we have done so,” Sinckler said, while pointing to the Arawak Cement plant, the former Heywoods [now Almond Beach) hotel as well as the Barbados National Bank as examples of entities that Government had divested.
Sir Frank’s advice was also very much in sync with that of the man who at one time was tipped to replace him as chairman of the economic advisory group.
Former Prime Minister Owen Arthur has become more vocal and adamant that there is no way out of the choking fiscal situation other than to sell off some state assets.
In one of the several occasions that he has raised the issue in recent times, Arthur last April reacted to a Moody’s downgrade of Barbados’ issuer and bond ratings to Caa1, by pointing out that after “C” comes “D”, therefore the island was one notch above debt default, which would only mean further downgrade.
He suggested at the time that privatization of some state assets was the way to go, arguing, “if you are cash strapped but asset rich, you have to sell assets”.