All not lost

FORMER Governor of the Central Bank of Barbados, Dr. DeLisle Worrell, said that while all is not lost, measures have to be undertaken to improve the country’s overall economic position.

In his March 2018 Economic Letter, Dr. Worrell said that the first order of business is for Government to remove the emergency taxes that are strangling private businesses. He also called on Government to cut public sector spending to eliminate the current account deficit.

Referring to a paper he had penned late last year and which called for a reduction in the size of the public sector, Dr. Worrell reiterated an immediate cut of 10 per cent in subsidies, and redundancy of 1 500 public workers would suffice.

“That will halt the foreign reserves’ slide and open the way for discussions with the International Monetary Fund (IMF) on a programme of financial support for public sector renewal,” he said.

Dr. Worrell, who was sacked last year by Finance and Economic Affairs Minister Christopher Sinckler, pointed out that the accelerating loss of foreign reserves in 2017 is evidence of the failure of Government’s adjustment policies. Reserves fell $246 million in 2016 and declined by $274 million last year.

According to him, since 2012 the Central Bank of Barbados has lost over one billion dollars of foreign exchange.

Dealing with the May 2017 Budget presented by Sinckler, Dr. Worrell said that the National Social Responsibility Levy (NSRL), which was to supply $218 million in revenue, realised only $97 million between April and December last year. He charged that the NSRL has had an adverse effect on economic growth in Barbados.

“In the absence of the tax, the Barbados economy might have achieved another 0.5 per cent growth on top of the one per cent growth that the economy expanded by last year,” he reasoned, noting that represents about $50 million in national income.

Turning to the two per cent foreign exchange fee which Dr. Worrell indicated was to supplement the NSRL by dampening the demand for foreign exchange, the Economist said that shortages of foreign exchange persisted mainly because Government was obliged to repay $137 million of foreign debt.

According to him, “Foreign lenders were unwilling to roll over the debt because of Government’s poor credit rating.” (JB)