EVEN WITH the celebration of Crop Over, the observance of the Emancipation Season and the day of national significance last week, the management and state of the Barbadian economy continue to be a topic of headline discussion and of controversy; and the issue of privatisation, or some variant thereof, emerges as part of any such discussion.
Growth and the creation of jobs are the desired objectives, but in the face of a sluggish economy producing low rates of growth, social commentators, businessmen, economists and others are giving their views of what, how and when measures must be taken to correct the problem. We have also heard and read the views and forecasts from the International Monetary Fund and the opinions of the rating agencies.
Alister Smith, the executive director of the World Bank Group, is the latest official to offer his view on approaches to re-energising economies in the Caribbean. He was giving the feature address at the Central Bank’s 36th Annual Review Seminar held at the Barbados Hilton on Tuesday last.
Bringing an outsider’s perception, he has some things to say about the regional economic situation which must be of more than passing interest to all who are concerned about our country. He is concerned about the strategy of the international funding organisations and thinks that a change of focus and destination of their loans might help to spur growth.
He pointed out that support from international funding agencies goes mainly to the public sector and that countries as a result have to rely mainly upon governmental action using those funds to build the economy and also to spur the rate of growth. He thinks that if there was a shift in such lending from governments to the private sector companies, countries would not have to depend so much on government since, as he sees it, the private sector must lead the way in growing regional economies.
In Smith’s opinion, governments should play a complementary role in setting the framework for the private sector to thrive, and in ensuring that appropriate institutions and policies are in place.
Most of us have long recognised that foreign direct investment in our economies is a sine qua non of our economic progress, since we are all undeveloped and incapable of producing the resources required to fund our necessary foreign exchange earning infrastructure. Some of us might not be overly concerned whether the funding goes to government or to the private sector so long as the country gets the inflow of foreign exchange and the funds are used for the immediate and long-term benefit of the country in creating jobs and building infrastructure.Â
But it has been long recognised that the private business sector is a much quicker and more efficient tool for the execution of the job creation and development of the kind of infrastructure which produces growth.
It is that kind of argument which is driving the debate on privatisation, but however efficient these strategies might be, it is more than an economy with which all governments, especially in developing countries, have to be concerned.
The raw application of business efficiency principles may cause the kind of human hardship which governments are sometimes forced to apply to contain runaway deficits.
So that while the shift in focus of international funding agencies may be desirable, the regulatory framework for the private sector must always be alert to protect the wider interests of the society.
