Dr. DeLisle Worrell
Governor, Central Bank of Barbados
International Business and Financial Sector Conference
Theme: “Global Challenges: Local Solutions”
March 19, 2013
Barbados manages to stay competitive in the global market for international business and financial services, tourism and other foreign exchange activities, in spite of the challenging international environment we face. The evidence is presented in the Global Competitive Index, published by the World Economic Forum, where Barbados maintains its position in the top 1/3 of the competitiveness table. However, we need to do much better, in order to stay competitive and achieve growth in international business and other foreign exchange sectors.
The Global Competitiveness Index gives guidance on the obstacles to doing business in Barbados. The inefficiency of government bureaucracy is top of the list, and poor work attitude on the part of our labour force is number three. Second among the obstacles is access to finance, but that is not material to the IBFS sector.
It is now widely accepted that government plays a crucial role in economic development, even in societies like our own where trade and commerce are mainly in private hands. In the much admired rise to world prominence of East Asian economies, for example, the landmark study by John Page, sponsored by the World Bank, documents the ways in which Government support contributed to the successful economic transformation of economies like Japan and South Korea, even though the symbols of their economic rise are private firms such as Toyota and Samsung.
The importance of Government involvement in the IBFS sector cannot be underestimated. The uniqueness of our sector is that it is grounded in our network of double taxation treaties, and we pride ourselves on a regulatory framework that meets the highest international standards. As you know, during 2013 Barbados will undergo a Financial Sector Assessment, conducted by the IMF and World Bank, and Phase ll Peer Review, conducted by the Global Forum. We anticipate that the results will reaffirm that Barbados is indeed on the right track, with respect to the regulatory environment.
In addition, the sector depends on a range of government services on a daily basis. Improved government efficiency is therefore vital. The measures to address government efficiency and work attitudes are many and varied, and they must be implemented and maintained in numerous individual transactions every day. In order to know that progress is being made, an effective monitoring and feedback system is needed, that tracks all the elements, processes and transactions between private agents and the government agencies and institutions that serve the IBFS sector.
We already have in place the institutional arrangements through which this monitoring can be made effective, in the form of the Joint Policy Working Group. I am suggesting that this body be the focal point for monitoring events and policies in the sector, and that it set up measures by which it will monitor the performance of Government agencies, including the Financial Services Commission and Central Bank. Monitoring by itself is not sufficient: there must also be feedback to decision makers, so that corrective measures are taken when there is no evidence of performance improvement. My suggestion is that summary reports be prepared for Cabinet by the JPWG, reporting on progress in improving service quality and diversifying product offerings, and highlighting areas where corrective action is needed. It is important that these reports be concise, to the point, and action oriented. Enough time should elapse between reports to Cabinet that the JPWG can track and report on the impact of remedial measures.
I have set out this suggestion in some detail to make the point that we do not need to create a new institution to make monitoring and feedback effective. All that is needed are minor procedural tweaks to the existing arrangements.
The IBFS sector is vital to Barbados' growth prospects because it is second to tourism in foreign exchange earnings, and because it provides employment opportunities for Barbados' relatively well educated workforce. Its success depends on its competitiveness, and its competitiveness depends on the quality of services Barbados offers, especially Government services. The reward for improved Government efficiency will be growth in the sector and high?er potential growth for the economy.
Central Bank of Barbados IBFS Seminar Welcome Remarks
Mrs. Melanie Jones, President, BIBA