EDITORIAL
In January this year, Prime Minister Freundal Stuart declared that the financial statements of government were heavily burdened with expenses such as debt service, wages and salaries, and transfers to state-owned and other entities. This is because many, if not all of the state owned entities receiving these transfers are operating below the required level of efficiency.
The brutal reality is that the survival instinct which drives private sector enterprises is, to a large extent, absent from government owned entities. This creates an environment where, in order to save jobs, the government keeps the entity financially afloat by continually ploughing money into these inefficient and unproductive organisations. This situation is part of the reason we are in the predicament that we currently find ourselves in.
A situation where our country is operating on 10.3 weeks of import cover, a country whose once prestigious credit rating has now fallen to a rating of CCC+, ranking Barbados amongst the lowest-rated nations. The time for fiscal reform is long overdue, and divestment is one of the reforms that has been offered up as one of the solutions to correct the fiscal deficit.
It is clear that divestment of the loss-making state owned enterprises is a must.
However, the delayed manner with which we as a country have enforced fiscal reform measures has led us to our current situation where there is a proposal to sell one of our state owned enterprises, one that has been opined by some as the “crown jewel” of state assets.
This sale has become absolutely integral to propping up the island’s ailing reserves, forming part of the $250 million needed to bring the foreign reserves back up on its feet. While divestment can ease the fiscal deficit to both an economy and a previously struggling entity, the question must be asked in this case whether the sale of Barbados National Terminal Company Limited (BNTCL), is representative of an earning source for government that will now be eliminated. Is BNTCL one of these companies that is burdening the balance sheet of government with transfers? After all, it was reported earlier this month that the purchaser is of the view that “BNTCL is run efficiently and that there are no obvious areas for cost reduction”.
While we would agree that many state entities may have high asset bases, and that this doesn’t necessarily translate to economic growth or profit because many governments do not utilise high assets for profitability efficiently, we maintain that in the interest of transparency, the government should facilitate easier access of financial statements of state enterprises to all Barbadians. While we do not propose that we hold any state enterprise as sacred, we the citizens cannot be expected to eat up solutions like manna and honey without question, as we too have a stake in our economy.
In conclusion, we say ‘yes’ to the privatisation of state enterprises that can be shown to the Barbadian public to generate significant stress on the public purse, but let’s do so with the utmost accountability and transparency to all shareholders.