He was recently fired as the Government’s chief economic advisor, but that has not stopped former Central Bank Governor Dr DeLisle Worrell from devising what is a much-needed way out for the faltering Barbados economy.
Word of Worrell’s so called “appropriate strategy” comes at a time when the Freundel Stuart administration is said to be fast running out of alternatives to either a currency devaluation, or taking the dreaded road to Washington to the International Monetary Fund (IMF) or another international funding agency for support.
However, so far, the ex-Governor has been keeping the major components of his economic plan close to his chest, even though he promised during the just-ended International Business Week conference at the Lloyd Erskine Sandiford Centre, that details would be forthcoming in the coming weeks.
“In a few weeks I will publish a paper outlining the main components of an appropriate strategy to address both the excessive cost of Government operations and the low levels of effectiveness of many Government services,” said Worrell in a presentation entitled Meeting the Challenges Facing the International Business and Financial Services Centre.
The former Central Bank Governor, who was sacked back in February at the height of public disagreement with Minister of Finance Chris Sinckler and other top Government officials over monetary and administrative strategy, had previously suggested that Government needs to take a leaf out of the books of some economies in Europe and slash spending, while seeking help from the IMF, if it wants to get the economy on a solid footing again.
Worrell had also warned that the level of productivity in Barbados was way too low, especially within the public sector, which he maintained was simply too large for the country to carry.
In the face of a $542 million austerity package announced by Sinckler earlier this year, Worrell had also accused Government of overextending Barbadians.
“Thirty cents of every dollar the Barbadian earns goes in taxes to Government through the various taxes we pay, so you only have 70 cents to yourself and of those 30 cents they still cannot make the Government run. They still have to borrow on top of that to run the Government. Our Government is costing us too much,” he said back in July, following Sinckler’s May 30 Budget presentation.
But without repeating any of his controversial proposals, Worrell expressed strong optimism last week that the economy, which is expected to grow by less than one per cent this year, down from the 1.6 per cent in 2016 and 0.5 per cent in the previous year, would experience an about turn “in short order”.
However, he cautioned that decisive action must be taken.
“I am confident that the Barbadian economy can be returned to a path of growing prosperity in short order, once decisive action is taken to address the public finances and the low productivity of the public sector,” he explained.
The Stuart administration has been struggling to lower its deficit of almost six per cent and high debt of more than 140 per cent of gross domestic product, and at the same time to increase the country’s foreign reserves, which plummeted to about 9.7 weeks of imports to $635.5 million at the end of June.
Just yesterday, another economist, Jeremy Stephen, suggested that in the face of a declining private sector appetite for Government paper, the IMF, another funding agency, or a dollar devaluation were the only feasible options staring Government straight in the face.
However, with the Yuletide season fast approaching, Worrell is seemingly seeking to be the bearer of good tidings, instead of being the prophet of doom and gloom.
While making reference to his June newsletter, he pointed out that there were numerous countries with fiscal challenges “far more severe” than Barbados.
These include Ireland, Iceland, Latvia and Cyprus, which the ex-Governor noted had returned to robust growth within three to five years due to “decisive fiscal correction”.
Worrell also suggested that if Government’s cash deficit was addressed, it would restore investor confidence and trigger the release of resources that could be used to support tourism, international business and other foreign exchange earning activities.
“The restoration of investor confidence and a well-documented strategy of engagement with international regulatory agencies are the most essential elements of a strategy to support the international business and financial services sector. These elements will serve to build on the foundation of Barbados’ established international standing, to further the growth of the international services activities,” he said.
And even with the international and financial services sector facing “formidable” challenges, the senior economist was very confident that Barbados could overcome them.
“The countries that will emerge soonest are those that play to their competitive strengths and focus on the long term. There is no doubt that we will have a rocky ride for some time, but if we stick to our guns and continue to play the cards we have skillfully, the future of the Barbados international business and financial centre is assured,” he said, while pointing out that Barbados had always been one to adhere to international rules and regulations. [email protected]