EDITORIAL - Privatisation not the solution

TO privatise or not to privatise. 

 

That’s the ongoing debate in this country, which has been experiencing some economic challenges. And with this debate raging as well as suggestions that Barbados seek out an arrangement with the International Monetary Fund, Prime Minister The Honourable Freundel Stuart touched on the subject when he addressed the Barbados Chamber of Commerce and Industry (BCCI) a week ago. 

 

Stuart stated: “In a mixed economy, the Government must continue to play a key role in the provision of goods and services for purchase by individuals, and will continue to invest in and promote the production and distribution of such goods and services.” 

 

He looked at it from two angles. The first is that those who support privatisation see it as a panacea for the economic ills of Barbados, and do so on the premise that the private sector is a better manager than the public sector. 

 

Those opposed to privatisation contend that while it may bring short-term relief in a financial crisis, its longer term value is highly questionable.

 

Privatisation is usually part of the toolkit the International Monetary Fund (IMF) and other global agencies have attempted to impress upon developing countries seeking economic assistance from said agencies. 

 

What also seems to be happening in Barbados is that people making the call for privatisation believe that once the government divests itself from the state-owned enterprises, that that is the answer and the benefits will ‘fall from heaven like manna’. 

 

They also feel that every policy that is tried in other countries must be transplanted here without an understanding of the society in which these things are being implemented.

 

Last year in an IMF publication, the point was raised that privatisation is no longer on the IMF radar because it does not work. In other words, it has become an oversold option for economic resuscitation, and one that is laced with all kinds of shortcomings. 

 

Funny, however, that it is being strongly promoted by commentators in our midst.

 

There will come a time when a Government might be tempted to sell off strategic assets, hopefully to private enterprises. Right now Government has offered to sell the Barbados National Terminal Incorporated to secure at least $100 million to prop up the island’s foreign reserves, while also tackling the fiscal deficit. Last year it was at pains to point out that it was not going to sell the Sanitation Service Authority amid concerns raised by the National Union of Public Workers. The Minister of Finance raised the case of CBC at a similar 

BCCI luncheon. He wondered who was going to buy CBC with its accompanying debt. The bottom line therefore is that while privatisation may make sense in certain circumstances, it does not in others    

 

There are several economists, social scientists, and even some politicians who have agreed that we must not adopt other people’s policies and try to impose them lock, stock and barrel on our environment. What might be necessary in one jurisdiction is not quite the same in another. Barbados’ development took place based on the environment,  and there is still a role for the state sector, as our prime minister pointed out.