FREEZE ORDER - Economist urges routine cost-cutting exercise as Gov’t tightens purse strings

An economist has suggested that the Government should make identifying cost-saving measures a routine exercise, regardless of how much revenue it collects.

The suggestion follows a new set of directives from the Government instructing public-sector entities to put on hold the acquisition of assets and entering into new lease arrangements.

Public-sector entities have also been instructed to pause hotel retreats, as they were put on notice that a directive on annual end-of-year activities “will be issued”.

The new instructions were circulated across government agencies last week, documents seen by The Gleaner show.

“Please be advised of additional directives from the Cabinet Secretary. Please pause the acquisition of assets and the entering of any new leases until further directives are received,” read a section of one document.

“Assets ordered but not yet paid for: Please hold these pending further instructions. Please pause any retreats being planned at hotels.”

An October 21 memorandum, made public last week, revealed that Prime Minister Dr Andrew Holness had instituted an immediate moratorium on official travels across the public sector until the end of March next year.

The pause applies to Cabinet ministers, junior ministers and other political officeholders, as well as permanent secretaries and other senior public officials, including board members and chief executive officers.

The Government said the fiscal strain was caused by Hurricane Melissa and said the ban applies even where travel is fully funded by external organisations.

“At this critical juncture, it is imperative that Government exercises the highest degree of fiscal discipline, prioritises expenditure, and ensures that the attention and efforts of ministers and senior public officials remain focused on national reconstruction, economic recovery and the effective delivery of public services,” the circular said.

Economist Keenan Falconer said there is no recent financial data “to my knowledge that may indicate why this has become particularly necessary”.

However, he said the move by the Government to consolidate its finances in this manner was a positive step.

Further, Falconer suggested that the initiative would be a good opportunity going forward for the Government to practise “zero-based budgeting” where resources make it feasible.

“This would enable the Government to justify and appropriately prioritise all expenditure items for each new Budget period before approval, which could help to minimise the possibility of making certain spending adjustments throughout the year,” he reasoned.

The main opposition People’s National Party (PNP) has scoffed at the explanation given by the Government, questioning whether the ban was a genuine effort to control costs or simply a public relations exercise, coming immediately after millions of dollars were committed to the newly established National Reconstruction and Resilience Authority.

“I think this ban raises more questions than answers as to whether this is really going to be an effective way to control costs,” said Julian Robinson, opposition spokesperson on finance.

While accepting that overseas travel must be managed carefully, the PNP said the Government has not disclosed how much it expected to save.

livern.barrett@gleanerjm.com