The sewage crisis on the island’s south coast stands out as a notorious example of public sector inefficiency, former Central Bank Governor Dr DeLisle Worrell suggests.
Worrell, a habitual critic of low productivity and inefficiency in the public sector, returned to the subject in his latest newsletter, which he describes as an economy letter, charging that the country was being held back by inefficiencies across the government system.
“The inefficiency of the public sector undermines the country’s competitiveness, and damages its international reputation. The current sewerage crisis is the latest example of this,” he wrote in the February 2018 issue of the newsletter.
It is this level of inefficiency that has retarded economic growth, he said, arguing that had it not been for a culture of delays, bureaucracy and inefficiency in recent years, the economy would have grown by three per cent last year.
“The Barbados economy would have grown by at least three per cent last year if major investments in tourism, housing, renewable energy and infrastructure had not been delayed or frustrated by bureaucratic delays and inefficiencies over the past several years. Barbados has a very competitive economy, with high-end tourist facilities, highly regarded international financial and business services, world-renowned rum and entrepreneurs that are making a name for themselves internationally,” the former governor stated.
Worrell, who had fallen out with the Freundel Stuart administration over the bank’s continued printing of money to pay public servants’ salaries and fund Government social programmes, was fired in February 2017.
He subsequently launched the newsletter to offer economic advice to the administration, including the steps needed to be taken to resuscitate the moribund economy.
He stressed that in order to unleash the economy’s true growth potential Government must adequately cut its expenditure to reduce the current account deficit while carrying out “fundamental structural reform” to ensure a more competitive public service.
It is not very different from what his successor, Cleviston Haynes, recommended yesterday when he presented the 2017 economic review, during which he revealed that expenditure grew by an estimated $9.9 million and there was lower than expected tax revenues from the austerity measures introduced last year.
Haynes also announced that the island’s foreign exchanged reserves has sunk to a 22-year low of $410 million, or 6.6 weeks of import cover, a long way from the recommended 12 weeks.
Worrell said that was bad news, especially since Government was failing to address the inefficiencies.
“That has stifled the economy’s growth, and eroded the foreign reserves of the Central Bank,” he said, while warning that the dangerously low foreign reserves threatened the Central Bank.
He again promoted his seven-point plan, first recommended late last year, which included a proposal to slash the public service by 4.5000 over three years, with funding from international financial institutions for the separation packages, a ten per cent cut in subsidies to state enterprises. “an aggressive” programme of divestment of some statutory bodies, a temporary freeze of all public investments, except those funded by foreign finance.
Stating that his plan was perhaps the only one that would bring relief to the ailing Barbados economy at this time, Worrell used the analogy of a doctor prescribing medicine that fits a diagnosis.
“What ails the Barbados economy is a bloated public sector which the country cannot afford, and which does not deliver many critical public services to acceptable levels of internationally comparable efficiency. I have offered a prescription to address these ills. As far as I am aware, it is the only targeted and comprehensive prescription on offer,” he said.
He had also suggested the need for “an aggressive” divestment programme of some statutory bodies, a temporary freeze in all public investments, except those funded by foreign finance, final approval and start of work on all tourism projects that were to have started last year and negotiations with key lending institutions, including the International Monetary Fund, to support a five-year programme of structural adjustment, with strong conditions that fiscal reform will be implemented.
Government has recently announced that it would be implementing a Barbados Sustainable Recovery Plan 2018, to drive sustainable growth.