Business Monday: Assets can be helpful

EX Central Bank of Barbados Governor, Dr. Delisle Worrell, is advising that Government use some of its assets to improve the country’s fiscal position.

In his November 2018 Economic Letter, Dr. Worrell reasoned that this can be done by developing strategies to increase income from these assets. He said that 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,” said Dr. Worrell who is also an Economist.

He remarked that the Fiscal Monitor, a publication of the International Monetary Fund (IMF) has pointed 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, he maintained. The economist pointed out that these countries offer examples that Barbados might do well to emulate.

He remarked that while Barbados is not among the countries listed in the Fiscal Monitor, one can make inferences about our Government’s net worth from the items included in Government’s assets and liabilities. Assets include financial assets, Government non-financial assets and public corporation assets. Liabilities include debt instruments and national insurance liabilities.

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.

The list of Barbados Government assets, according to Dr. Worrell, includes all public buildings; all NIS properties;

• the Queen Elizabeth Hospital (QEH) and other health facilities;

• educational facilities; roads and other infrastructure;

• the Air and Seaport; public sector vehicles and equipment;

• water, natural gas and sewerage systems; Sanitation service facilities and equipment.

Others include public infrastructure; the Hilton Hotel, and other Government enterprises, Barbados National Terminal Company Limited (BNTCL) properties, parks, public playing fields and other recreational facilities; Crown lands including beaches;

Agricultural lands held by public corporations, contribute the government asset class.

“Government assets suggests numerous opportunities for earning additional revenue for the public sector, bettering public finances and stimulating economic growth,” he advised.

“More profitable and efficient management of public assets is another reason why a thorough, top-down reform and modernisation of public services must be given high priority,” he said.