Economist backs spending cuts to end ‘major wastage’

A University of the Bahamas economist yesterday backed government spending cuts on the grounds there has been “a great deal of wastage”.

Rupert Pinder, addressing a Rotary Club of West Nassau luncheon, said: “We cannot overemphasise the importance of economic growth. You can cut spending until the cows come home, but what is really going to put this economy on a strong footing is growth. I am a proponent for cuts in public spending because I think there has been a great deal of wastage.

“While making expenditure cuts you also have to look at ways to grow this economy. While you are making cuts in terms of public sector spending, you also have to create opportunities within the private sector to absorb those persons. That is absolutely critical.

“We don’t emphasise that enough; the need to grow this economy.”

The Minnis administration has announced plans to cut recurrent spending across all ministries by 10 per cent, implement a hiring freeze and not renew any contracts for emoluments that exceed $100,000 a year.

The International Monetary Fund (IMF), in its Article IV report, had recommended that the Government could achieve more than $200 million in Budget savings through a combination of reducing the civil service wage bill to its 2005-2016 average; requiring public servants to contribute to their own pensions; and cutting subsidies to state-owned corporations by a sum equivalent to 1.25 per cent of GDP.

The Fund targeted wage bill savings equivalent to 0.8 per cent of GDP, or just below $70 million, and its recommendation set off alarm bells among many Bahamians and public sector workers, who feared instant - and widespread - redundancies if the Government adopted its suggestions.

Deputy Prime Minister and minister of finance, K Peter Turnquest, previously told this newspaper that the Government is not targeting the IMF’s $70 million wage bill slash but it must right the Bahamas’ “upside down” economy.


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