Put a lid on public spending by imposing a virtual freeze on public sector wages.
Just as important, is tight management of the foreign reserves, while eliminating wastage of public funds, especially through spending by state enterprises.
The advice to new Minister of Finance Chris Sinckler, has come from Sir Courtney Blackman, first Governor of the Central Bank.
“I would say that public sector wages [should be] virtually frozen until we recover from the current situation,” Sir Courtney told the MIDWEEK NATION.
“I would certainly tell him not to remove exchange controls, let the present regime go on. I would tell him commence, as soon as he can, reform of the public sector to make the statutory corporations function as modern corporations and be financially accountable.
“He should remove people who don’t keep their corporation’s accounts in order.”
Sir Courtney, who described as a “red herring” the frequent calls by Standard & Poor’s, the Wall Street credit rating giant, and now the International Monetary Fund, for Barbados to close the expanding fiscal deficit, said the real issues were managing the foreign exchange reserves and cutting public spending.
“If you do the right things, the deficit would take care of itself. The variable you have to watch with the Barbados economy is the level of foreign exchange reserves. If you have enough foreign exchange reserves, you are okay. When you don’t have enough, you will go the way of Jamaica and Guyana.
“The deficit is something that falls out of other policies. If you have the right policies in place the deficit will take care of itself. It is not an objective variable that you follow.”
What then are the right things Sinckler and the Thompson Cabinet must do to manage the foreign exchange reserves and deal with the deficit?
Sir Courtney listed “control of public expenditure” as Sinckler’s top priority, and a determined effort to “keep waste to a minimum by improving the functioning of statutory corporations which throw away a lot of money”.
He felt Sinckler should move to shut down those public enterprises which were “useless”, such as the Pan African Commission.
According to him, political party affiliation shouldn’t figure prominently in the hiring of top executives of state enterprises, since efficient top executives and acceptable management practices were needed at the statutory bodies.
“Undoubtedly, the Minister of Finance recognises that the most significant element of public expenditure is wages in the public sector and, therefore, you have to put a lid on that, in my viewpoint,” Sir Courtney added.