Amid the ongoing restructuring of the public sector, former Central Bank Governor Dr DeLisle Worrell is proposing that Government make better use of its crown jewels rather than sell them off to raise more revenue.
In his November newsletter, the economist says while Government could sell some of its many assets to pay down debt, he suggests a better strategy would be to generate more revenue.
“Admittedly Government has an uncomfortably high level of debt and NIS obligations. However, the Barbados Government has an enormous store of physical assets of many kinds, far in excess of its debt and NIS liabilities. Government can improve the fiscal position by developing strategies to increase income from these assets,” says Worrell.
“As with individuals and companies, Governments may sell assets to pay down debt. But a better strategy for the long term is to use the assets more efficiently to generate more revenue,” he says.
As part of a wider Barbados Economic Recovery and Transformation (BERT) programme, the Government plans cutting back on spending, raising revenue and driving down the high debt and fiscal deficit.
Involved in that process will be the merging of several agencies, a public/private sector partnership and possible sale of others.
Referring to the latest International Monetary Fund Fiscal Monitor – which surveys and analyzes the latest public finance developments in several countries – Worrell says while Barbados was not mentioned, there were lessons that could be learned.
He explains that Government could work out its own net worth, which could give a more accurate picture of its financial position.
“The Central Bank of Barbados records the identified debt and contingent liabilities of the public sector as $15 billion. The NIS’ liabilities to pensioners are less than $3.5 billion. Government’s total liabilities are therefore less than $18.5 billion. The financial assets of Government, the NIS and the Central Bank of Barbados are recorded at about $7 billion. The difference between the liabilities and Government’s financial assets is a net liability of $11.5 billion,” he states.
In addition, says Worrell, Government could compute the full value of all its assets, which include crown lands, water, natural gas and sewerage systems, the sea and airport and all public buildings, and match them against the public sector debt and NIS liabilities.
“We would then know our Government’s net worth, which offers a more accurate picture of Government’s financial position,” he says in the latest monthly newsletter.
“The Fiscal Monitor points out that Australia, New Zealand, the UK and Uruguay have used this approach to public wealth to improve public finances. They have identified the size and nature of public assets, and set about to increase revenue by better management of these assets,” says Worrell.
“These countries offer examples that Barbados might do well to emulate. The list of Barbados Government assets suggests numerous opportunities for earning additional revenue for the public sector, bettering public finances and mulating economic growth.
More profitable and efficient management of public assets is another reason a thorough, top-down reform and modernization must be given high priority,” he suggests.