Public sector wages burdening Barbados Government
This was the disclosure by the CCB Governor, Dr. DeLisle Worrell, during the ‘Economic Forum: It Matters Fiscally’ panel discussion on Thursday night where he noted the CBB has been put in an economically unsound position by having to finance Government’s fiscal deficit.
“We cannot continue to have a wages bill that is as high as ours, simply because the only way we are able to do that is by the Central Bank providing financing.”
He explained the weekly projections outlined by the Barbados Revenue Authority (BRA) are not nearly enough to meet this enormous expense.
“On the week on which Government workers are paid, we always know, that in addition to all the other expenses, we have $50 million to pay Government workers. And that is why the amount that Central Bank lends always goes up on that week because BRA does not bring in enough money to meet Government expenditure during salary week.
“That is why the current account deficit has to be eliminated - not reduced. Government has to live within its means on an ongoing basis.”
Further to that, Dr. Worrell said the need to borrow from the CBB to meet Government’s expenses was putting unnecessary pressure on the island’s foreign exchange reserves.
In the 2016 Economic Review released by the CBB last month, it was revealed that Barbados held a mere 10.3 weeks of import cover which is below the accepted 12-week standard. While the Governor gave the assurance that an expected $250 million of inflows from construction projects and the proposed sale of the BNTCL would be enough to bring the reserves back up, the disclosure was enough to send shock through the business community.
When questioned as to government’s plans to address the growing fiscal deficit, the Governor appeared to be beating around the bush without providing a definitive response. But fellow panellist, Dr. Winston Moore, Head of the Economics Department at UWI, Cave Hill, put it quite plainly - reduce the number of public servants.
“The only way to cut back on the wages and salaries is if you reduce the number of persons employed in the public service. I guess the Governor was getting all around it but that is essentially what it implies - that to cut wages and salaries, you need to cut the number of workers.”
Dr. Moore also suggested the government look more closely at the partial sale of government assets, adding, "Privatisation is not a bad word."