BRIDGETOWN (CMC):

A top economist here has recommended that the Barbados government stop its continued subsidisation of gas and electricity in an effort to ensure the stability of the economy.

Charlie Skeete, a former Barbados ambassador to Washington, said the David Thompson administration should pass on the cost of the commodities to consumers if it wanted to maintain and manage the country's fiscal position.

Skeete, who is also a retired senior economic adviser at the Inter-American Development Bank, told the Sunday Sun that "gas prices are in need of an increase", adding that "there is no question of the inflationary effects of increasing electricity rates and water rates for that matter".

The economist acknowledged that economic wisdom and politic realities do not always go hand in hand.

Run fiscal deficits

"The government will have the choice of continuing to run fiscal deficits of the kind that it inherited or of passing on some of the costs to the consumer. That's the proverbial cliché between a rock and a hard place. I don't, for one minute, underestimate the political fallout from an attempt to rationalise these things," he said.

To the contrary, the Barbados Flour Mills Limited has warned of a possible hike in the price of flour if the David Thompson administration does not continue subsidising the product.

According to the Sunday Sun newspaper, the commodity will increased by some 30 per cent by April 14 if the government does not step in to avert the hike by continuing its subvention programme which was due to end on March 31. It is still intact.

"Based on what our principals are telling us, the price of wheat will continue to rise. We're not seeing any let-up with the prices right now," Cecil Hypolite, commercial manager of the company said.