He was recently fired from the helm of this country’s monetary authority.
But that has not stopped former Central Bank Governor Dr DeLisle Worrell, following his dismissal back in February, from freely dishing out his economic advice to the Freundel Stuart Government, whether it wants it or not.
In the first of what is expected to be a series of economic letters, Worrell Tuesday offered his advice on how Democratic Labour Party (DLP) administration should proceed in a bid to safeguard the Barbados dollar.
Though not seemingly convinced that sale of state-owned assets will achieve the desired economic turnaround, Worrell warned that “a reduction in the numbers employed in public services is inevitable, since the present wages bill cannot be managed without further borrowing from Central Bank!
He also said Government would be “well advised” to seek the assistance of the International Monetary Fund (IMF) “without delay”, explaining that the IMF “can assist in designing the reform process to increase efficiency through the employment of higher levels of skill and the appropriate use of new technology, with no permanent diminution in the quality of public services”.
“An essential element of the reform would be adequate separation packages for all those public servants whose services are no longer needed, so that they may make a smooth transition to the next phase of their lives,” he wrote.
Efforts to reach Minister of Finance Chris Sinckler Tuesday for comment on Worrell’s economic remedy were unsuccessful.
However, the former bank Governor’s advice aligns squarely that given by former Prime Minister Owen Arthur and other leading economists months ago, even while Worrell was still at the helm of the country’s monetary authority.
Nonetheless, Government remains adamant that it will not go the IMF route at this time, and the closest that Stuart has come to saying that major cuts are in store was in a speech in which he warned Barbadians to be prepared to carry more of the economic weight.
“The first 50 years of independence were years of entitlement, but the next 50 years of independence cannot again be years of entitlement because we have now built a middle class in Barbados,” Stuart said.
He stressed that in the interest of the country, Barbadians would have to be asked to carry a little more of the weight.
“We couldn’t ask them that in the early 1960s because none of us could afford to carry any weight,” Stuart added.
The Prime Minister’s comments came against the backdrop of a worrying economic situation highlighted by dwindling foreign exchange reserves, which fell precariously from $1.4 billion in 2012 to $681 million by the end of last year.
In his letter, Worrell zeroed in on the impact of the current situation on the country’s dollar.
In fact, to reflect his primary concern the former Governor, who had developed an aversion for meeting with the media while in office, chose to title his economic correspondence, which he posted on his personal website and also emailed to select members of the media, It’s Worth the Effort to Save Our Dollar Peg.
In his letter, the former Governor called for urgent action in the interest of maintaining the island’s 2-1 peg against the United States dollar.
No longer confined by any Governmental agenda, Worrell did not hide how he felt about the country’s public sector. In fact, he described it as “a drag on investment” and warned that it was “living beyond its means”.
He also openly complained that two decades after Government had openly committed to public sector reform, public sector performance was now “at its lowest ebb”, while warning that spending cuts would have to be made.
“Reduced Government spending and forceful measures for public sector reform are the key to arresting foreign reserves losses and securing the exchange rate anchor,” said Worrell, who remains optimistic about the competitiveness of both the tourism and international business and financial sectors.
However, the respected economist warned that despite Barbados’ reputation as both a quality tourism destination and a highly regarded international business and financial service centre, “its promising growth potential will not be fully realized, and may very well be lost, unless there is a turnaround in the performance of the public sector. “. . . the levels of efficiency and productivity in the delivery of public services are not up to par with what visitors and investors have reason to expect, and what our competitors offer,” Worrell stressed.
He also restated a warning he had made earlier this year, at the height of disagreement with Government on economic policy, that “the most pressing economic challenge Barbados faces today relates to the excess of public sector spending over tax revenues, and the unsustainable level of borrowing from the Central Bank”.
He also reiterated that “heavy borrowing by Government over the past two years has now depressed Central Bank foreign reserves below the equivalent of 12 weeks of imports, and triggered widespread apprehension about the exchange rate anchor.
“In order to restore confidence and secure the peg, decisive action is needed to reduce Government’s ongoing expenditure to the amount of tax revenues,” said Worrell.