THE STATE OF THE Barbados economy was once again hot news as the country moves towards the month of its 50th anniversary of Independence. It is due to the vagaries of politics that, having achieved Independence on the basis that we could paddle our own canoe, we now find that we are facing severe economic challenges after many years of punching above our weight.
The Governor of the Central Bank, in delivering the bank’s review of the economy on Tuesday last, disclosed the “printing” of $114 million by the bank to assist in easing the pressure on Government’s cash flow needs. That is a commentary in itself of the difficulties into which we have fallen since this facility is only part of the $326 million from domestic sources which the Government needed to use in the first five months of the financial year.
Against this background, the issue of privatisation again raised its thorny political head when Minister of the Environment Denis Lowe asserted in Parliament that the Sanitation Service Authority would not be privatised because his Government believed that garbage collection was best kept in the hands of the state because it was an essential social service.
Acceptance of the minister’s statement raises the pertinent question of how the recent outsourcing of aspects of garbage collection to commercial collectors stacks up against the need to restrict expenditure and contain the deficit and reduce the Government’s reliance on the Central Bank’s printing of money.
That question and other similar questions need to be answered if the public is to keep faith and hold hands with the Government as the country faces challenges. However, it is becoming increasing difficult to work out what exactly is the Government’s policy on privatisation.
The view of former Prime Minister Owen Arthur that privatisation can work was made also on Tuesday when he explained it as letting the private sector do things that it can do better than Government, and if one saves money in the process, then he sees it as a win-win situation.
We are not supporters of total privatisation, nor are we suggesting that Mr Arthur is; but it is clear that if the drain on public finances is to be brought under control, then some carefully crafted and discreet programme must be put on the front burner sooner rather than later.
We can no longer afford to delay carrying out critical and needed measures in the national interest where political considerations appear to have too high an impact on decisions.
We support what appears to be quickened pace on Government’s part to get foreign exchange-generating entities like Hyatt established since the disclosure that the offshore sector, which generated $356 million in 2007, has produced only $95 million, according to the latest International Monetary Fund (IMF) report.
This brings us to the most potent criticism of current economic policy, which is that the Government is carrying out IMF policies without the benefit of IMF funding, and that this country was now as bad or worse than countries in IMF programmes.
This criticism carries weight not only because it came from Arthur earlier this week, but it is being echoed by thinking members of the community who are not happy with the direction in which we now are headed.
We said it before but it bears repetition. The Government has to exercise political will and take the necessary and perhaps unpopular measures like privatisation to shrink expenditure.
Printing money is not the solution. Higher growth has to be generated and more foreign exchange has to be earned.
