No need for major cuts
The recommended cut to Government’s wage bill does not have to equate to massive layoffs.
This was the assessment of Barbados Economics Society president Ryan Straughn, responding to the suggestion made by several local economists and most recently, the International Monetary Fund (IMF).
Straughn said measures to reduce the civil service could include enticing workers to retire early or utilizing skilled public servants in the capacity of entrepreneurs or consultants.
“This would prevent Government from being locked into this recurring expenditure.
“It would also give skilled civil servants an opportunity to go into the private sector both in Barbados and within the region,” he said.
He told BARBADOS BUSINESS AUTHORITY a reduction in spending was critical to improving Government’s fiscal situation.
“Obviously the issue lies in transfers and subsidies,” he said, noting that a reduction in grants to individuals would mean that Government’s debt would not be as “large and problematic” as it currently is.
In light of the IMF’s emphasis on expenditure reduction, the economist and management consultant also recommended that Government aggressively pursue alternative energy solutions so as to reduce its spending on energy.
In respect of raising revenue, Straughn, who criticized the IMF’s suggestion to make the 17.5 per cent VAT rate permanent, added that Government needed to invest in areas that would bring returns in the long run.
He noted that while there was “no way around the high investment in tourism”, new markets like Latin America need to be actively pursued.
He said the island should also seek to exploit its trade agreements with various countries, especially in the areas of manufacturing and agriculture.
Addressing last Friday’s Duty Free Day, Straughn said it was a “good initiative” that would improve businesses’ year-end bottom line.
However, he noted that business and consumer confidence would be low going into 2012 and if it were made an annual event, Barbadians may simply hold off spending until the day arrived.
According to Straughn, Government needs to get the economy to the point where it is not reliant on trade taxes.