Minister of Finance is ruling out any drastic measures to lower Government spending, despite a warning by Governor of the Central Bank of Barbados Dr DeLisle Worrell that action had to be taken to eliminate the deficit.
In presenting his economic report for 2016, Worrell yesterday said a “reduction in wages and transfers would assist in eliminating the Government’s deficit on its current account.
“The fact that Government spends more on the current account than it receives in taxes and other current receipts is the reason for the increase in Central Bank lending to Government. There is general agreement that any additional financing by Central Bank should be avoided,” he said.
However, without dismissing the recommendation outright, Sinckler suggested he was prepared to ignore it somewhat, even as he said cuts would have to come by attrition.
“[Government officials] don’t have to accept every piece of advice that comes out of the Central Bank, but we hear it and respect it for what it is because they are professionals,” Sinckler said as he wrapped up debate on the resolutions to restore the ten per cent that was cut from the salaries of parliamentarians and senior Government officers in 2014.
“We know that through a process of attrition and reorganization . . . we fill critical positions in Government. Once people come out on retirement, they leave the service for whatever . . . that gains can be made to reduce both the level of the public service in relation to its staffing, but also reduce the level of the wages bill without permanently compromising the integrity of the civil establishment, and the public service in Barbados,” the Member of Parliament for St Michael North West said.
“That’s what the Governor is really talking about,” he added, insisting that Government’s position was consistent with that of the governor.
However, Sinckler said that while there was a path towards reducing wages, Government faced a greater challenge to cut statutory transfers.
Explaining that pensions were categorized as transfers, the minister said this was “one of the fastest growing line items in the Government expenditure budget other than interest rates payment, or debt service payment”, increasing by $30 million in the 2015/2016 financial year, and expected to rise even further in 2016/17.
“We can’t cut pensions, we can’t cut statutorily agreed, and by law, enshrined gratuities, because it is what people are entitled to,” he emphasized.
“So when people see transfers increases and they feel that we just giving away free money to these statutory corporations to go and lick out, it is not true,” Sinckler said.
Government in 2014 severed some 3,000 public servants as part of austerity measures.