Prime Minister Mia Mottley though not entirely dismissing suggestions from former Central Bank Governor Dr DeLisle Worrell that Government should send home 1,500 public servants a year over a three year period, today promised that her administration would not be taking any “grim reaper” approach to the planned restructuring of the public sector.
In fact, she strongly criticized the approach of the former Democratic Labour Party (DLP) administration to retrenchment, saying it had used “a cutlass and not a scalpel” to chop roughly 3,000 public sector jobs about five years ago.
“Believe you me, never again shall it happen,” said Mottley, who is also the country’s Minister of Finance, in tabling amendments to the Financial Management and Audit Act and the Central Bank of Barbados (Amendment) Act 2018.
Earlier this year Worrell, in one of his monthly newsletters, suggested that Government should cut approximately 1,500 jobs in the public service over a three-year period and reduce subsidies to Government-owned entities, while seeking assistance from the International Monetary Fund (IMF) in fixing the island’s ailing economy.
“For him it is about putting labour at the front line and sending home [4,500 public servants], but for me and all of us who sit on these benches, and I suspect even the Opposition Leader, it is about reviewing the purpose and structure of Government, and seeing how best we can deliver what Government is supposed to deliver while at the same time protecting the people as far as possible,” said Mottley, whose two-month-old administration is currently in discussion with the IMF on a structural adjustment programme.
While insisting that there would be no massive job cuts, she said “we have said that there are some things that might be done differently . . . but [I will not] come in here and do as the then Minister of Finance did in 2013, August then December, and just announce X thousand to go home, 3,000, as if you had in your hand a cutlass coming down with all the crudeness and crassness . . . rather than using a scalpel,” she said.
“Shall we make Government fit for purpose to be for our people a beacon that brings hope, drives aspiration, and reflects excellence, or shall we be the grim reaper coming on labour first, ignoring the fact that yesterday marked 81 years since riots took place in this [land] to fight for rights that led to labour being recognized and be placed at the pinnacle at our national endeavour and pursuit of respect?” she asked.
During the debate, the Prime Minister also expressed disappointment over the level of Government securities held by the Central Bank, even as she questioned why Worrell was not more vocal about the situation prior to his sacking back in February 2017.
“I listen to his [Worrell’s] advice, but he has a different perspective on adjustment than I do. Just as he has a different perspective on whether there should be legislative oversight for the Central Bank’s purchase of Government securities. We have a different perspective on where the adjustment should be,” Mottley said.
Pointing out that in 2008 the Central Bank did not have any holdings in Treasury Bills and debentures, Mottley said the holdings in those securities plus overdraft, was in the region of $2.2 billion or 24 per cent of the island’s gross domestic product.
She argued that had the former DLP administration done what it was supposed to, the country would not be at the brink of economic collapse at this time, adding that the Central Bank’s exposure to Government had reached an “horrific and horrendous scale” because of the DLP’s “absolute and utter fiscal profligacy”.
“We continued to raise our voices from as far back as October 2013 recognizing that a board paper had been done in 2012 October, increasing the limit of primary securities within the Central Bank,” she said.
“We stand today as a Government committed to ensure that transparency, fiscal prudence and fiscal accountability shall be the hallmark of this Government,” Mottley said, while stressing that the maintenance of the fixed exchange rate depended heavily on fiscal prudence.
The Prime Minister insisted that her administration had no option other than to “confront the reality of our condition” and address the “insolvency issue” it was facing, given that the national debt stood in excess of $14 billion.
Under the amendments of the Financial Management and Audit Act the overdraft limit of Government would be reduced from ten per cent of estimated revenue for a financial year to 7.5 per cent, and there will be a “write off” of the existing overdraft of $308 million.
The amendment of the Central Bank of Barbados Act allows for the Central Bank to purchase or acquire notes, bills, securities and other instruments issued or guaranteed by Government up to a nominal value of ten per cent of estimated expenditure of Government in a financial year “or such percentage that the House of Assembly may from time to time approve”.
Saying she expected the debt restructuring process to be “completed within two months to three months at most”, the Prime Minister said she was eager to get on with the wider “business of the reconstruction and transformation of this great land of ours”.
Mottley also promised that her administration would continue to review the new limits in order to “bring it down further and further” as Government gets a better grip on its cash flow, while insisting that it was the failure of the last Government to live within its means that had put the country on the brink of economic collapse.