A “tardy, obsolete and poor” public service is causing Barbados to lose out on millions of dollars in foreign investment, former central bank governor Dr DeLisle Worrell has claimed.
Declaring there was no shortage of capital, he argued that while local and international investors showed great interest in Barbados and the rest of the region, inefficiencies have become a major stumbling block.
In his October newsletter, Worrell said: “The truth of the matter is that declining international competitiveness, not finance, is strangling investment in Barbados and the rest of the Caribbean.
“A significant upgrade in the quality of our public services is not the only factor in economic recovery, but it is the single most important key to unlocking the investment potential of Barbados and the rest of the Caribbean.”
The veteran economist said there was often talk about the hundreds of millions of dollars of “idle funds” at commercial banks that should be put into investment in order to create employment and grow the economy.
But he stressed that every investment project would require a number of goods that were not made locally, and would therefore require spending of precious foreign reserves to obtain.
He explained: “A basic feature of economies as small as Barbados is that all business investment, from hairdressers to supermarkets to power plants, has to be financed mainly in foreign currency, not domestic money.
“That is because the domestic currency cannot be used to acquire essential inputs from abroad, such as equipment, vehicles, materials, fuels and other inputs.
“This is true whether the project is large or small, private or public, for domestic production or export.
“It follows that all investment of necessity requires a substantial proportion of foreign finance.
“This means that the Barbados dollars in banks cannot be put to use in financing investment projects; for that, the banks will need to receive a larger supply of foreign exchange, from tourism, international business, manufactured exports or other sources.”
He added that an abundance of local currency finance would have no effect in the absence of investment projects that offered a competitive rate of return, and were undertaken by reputable, well-regarded companies.
Instead, said Worrell, the key reviving investment and economic growth was to improve competitiveness.
He declared: “Government services that are tardy, obsolete and of poor quality, along with deteriorating infrastructure, are causing the Caribbean to lose out to the competition.
“Public sector inefficiency continues to cost the Barbadian economy hundreds of millions of dollars in investment.
“Meaningful improvement in the efficiency of public administration and the delivery of public services will be rewarded with a recovery in investment.
“As is well known, there is no shortage of investor interest in Barbados’ competitive tourism, and in renewable energy, from Barbadians and foreigners.
“These investors, local and foreign, have access to the foreign exchange they need for the intended investment.
“Government administrative difficulties of one kind or another block the way to the realization of this investment.”