As Minister of Finance Chris Sinckler prepares to serve up what could be more belt-tightening measures in the highly anticipated 2017 Financial Statement and Budgetary Proposals at the end of this month, one risk analyst is cautioning Government to carefully assess any risks associated with the fiscal decisions it intends to take.
Regional Risk Assurance Leader for PricewaterhouseCoopers (PwC) Caribbean Region Network Bruce Scott is contending that without proper risk assessment things could go awfully wrong during the implementation stage.
The Freundel Stuart administration has been exploring ways to shore up the foreign reserves, which stood at $705.4 million at the end of March this year, the equivalent of 10.7 weeks of import cover, well below the 12 weeks’ benchmark.
Government is also trying to find ways to curb the worrying fiscal deficit, which ended the financial year at an estimated six per cent of gross domestic product, higher than the projected 5.8 per cent.
With that in mind, both Acting Governor of the Central Bank Cleviston Haynes and private sector officials, including Chairman of the Barbados Private Sector Association Charles Herbert, have warned that “painful” measures were needed to stabilize the economy, including reduced Government spending. And Sinckler has said the upcoming financial package would not be an election budget.
However, Scott told Barbados TODAY that like businesses, it was critical for governments to carry out risk assessments in order to protect themselves, as well as the population.
The Jamaica-based enterprise risk management expert said governments were normally guilty of trying to “do things for expediency or to win somebody over”, only to encounter risks that they did not bargain for during the implementation phase.
“So the Government is doing its budget, [and if] you don’t do a proper risk assessment the budget is not going to be right. It is in the middle of the implementation of those projects that you are going to realize that, ‘oh my gosh, I didn’t think about doing a cyber security review for the online payment systems that we are going to ask consumers to pay for government services,’” Scott said.
“You can’t wait until you are in the middle of the implementation. So what risk management will do it will cause you to think more proactively, see exactly what reality is and then you make the decisions today. So if we know it is going to cost us more money than we have we are going to either put it on pause or we are not going to do it,” he added, stressing that a number of unnecessary projects would also be eliminated.
Herbert yesterday warned Sinckler against imposing new taxes, hinting that it would be better to raise income taxes instead.
This led to a stinging response from Opposition Barbados Labour Party Leader Mia Mottley, who said it would be unfair to expect already struggling Barbadians to carry the burden for “Government’s incompetence or the greed of a few” by raising income taxes.
President of the Barbados Association of Retired Persons Ed Bushell has also warned of the risks associated with any new taxes in the upcoming May 30 Budget.