Boosting Public Sector Productivity: Former Governor recommends prioritizing skills upgrade in Barbados Government, financed through tax revenue

Former Governor of the Central Bank of Barbados, Dr Delisle Worrell, has suggested that the government prioritise spending on upgrading skills in the public service to boost its productivity.

Dr Worrell, who was governor during the Freudel Stuart administration from November 2009 to March 2017, made a case for funding these initiatives through tax revenue rather than relying on policy-based loans in the December issue of his monthly economic newsletter.

Highlighting the widespread complaints about implementation deficits in the Caribbean, he said these loans have failed to improve countries’ capacity to be internationally competitive or meet public policy goals.

He also argued that foreign borrowing diminishes rather than enhances a country’s ability to buy necessary consumables and inputs from abroad.

Dr Worrell, a member of the Bretton Woods Committee – a nonpartisan network of prominent global citizens promoting international economic cooperation and multilateral lenders as global forces for well-being – also wrote that just like an individual who borrows to pay rent, a government that secures a policy loan to improve skills and implementation capacity in the public service is weakening its finances, compared with the alternative of financing such upgrades out of tax revenues.

“To make matters worse,” he added, “in the Caribbean, more often than not, there is no measurable improvement in competitiveness or productive capacity that can be attributed to policy loans.”

Dr Worrell noted that there are many practical, political, institutional and managerial reasons why there has been no improvement in public sector productivity in the Caribbean.

He declared: “These are not problems that loan finance can solve.”

Responsible government borrowing should be limited to financing infrastructure and capital projects, Dr Worrell suggested. He asserted that all other spending on boosting public sector productivity should be covered by tax revenues.

He said: “Experience suggests that a prudent government should borrow only to finance infrastructure and capital projects. All other expenditures are to be funded from tax revenues, including spending to raise public sector productivity.

“Policies to improve productivity come with increases in current expenditures because of the greater remuneration needed to secure the services of persons with higher levels of skill.”