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Decreasing debt

Minister of Finance Chris Sinckler (left) and BCCI president Lalu Vashwani at today’s meeting.

Minister of Finance Chris Sinckler (left) and BCCI president Lalu Vashwani at today’s meeting.

The tens of millions of dollars which Government owes to the private sector should be paid out by July this year.

Minister of Finance and Economic Affairs, Chris Sinckler, told the annual general meeting luncheon of the Barbados Chamber of Commerce and Industry at Hilton Barbados resort this afternoon, that he had instructed his ministry to put a plan in place that would significantly reduce or eliminate those debts in the next couple of months.

Sinckler revealed that at the end of March this year, the records showed that Government had paid out an estimated $60 million in VAT returns to the private sector, about $37 million more than in the previous year. However, the finance minister admitted that what his Administration owed to the private sector and visa versa, was far more, in fact startling.

“I have instructed my team to produce immediately for me, a plan to significantly reduce, if not eliminate entirely those payments in the next couple months,” he announced to applause from the packed room of business leaders.

“The recent issuing of treasury bills limit is part of the strategy to address this vexing issue. What we have agreed is that those which have been processed already to be paid, over the next two months, that we will put resources in place to have all of those paid off; so that people could get their monies and get on with their business.”

The finance minister said in relation to the ones that were not processed, a lot related to a staffing issue, adding that the VAT Department was severely under staffed “and we will look to see how we can address that issue”.

But the Cabinet member noted that with the establishment of the Revenue Authority later this year, more personnel should be available to clear that back log of unprocessed VAT returns. Government, he said, was however owed hundreds of millions through such agencies as Land Tax Department, Inland Revenue and National Insurance.

He promised that Government would reduce the massive deficit in a comprehensive way, but insisted that most of it was structural.

Andy Armstrong (left) and Minister Donville Inniss.

Andy Armstrong (left) and Minister Donville Inniss.

“It lot of the deficit spending in the Barbadian economy is structural, locked deeply into the heart the economy. It is not just about salaries and wages in the public service, though much of this growth has not been matched by productivity gains, and that itself is a problem.

“It is about the high debt service costs which the country has been carrying for the better part of the last decade, a lot of which has gone into physical development and so-called capacity building activities, guaranteed by central government, through its statutory entities and have now become contingent liabilities,” asserted the minister.

The statutory entities identified include Kensington Oval, the Judicial Centre, the Coast Guard headquarters, the National Oil Terminals Limited and the Hilton hotel.

“And not all of them have delivered on the promise either,” declared Sinckler. “When we execute a comprehensive exercise in fiscal consolidation we have to address all areas in which we do business.

“We are going to look at the plethora of statutory entities that were created prior to 2008 and to ask ourselves: Do we really need all of them and how can we build synergies across that we can eliminate duplication and wastage? Yes we are going to do it. KOMI, BTI, Invest Barbados, Urban, Rural Development Commission, and I can go on. They were all created in the decade prior to 2007. They are a cost to the public purse.”

The Finance Minister promised that very shortly Government would embark on fiscal consolidation that would directly impact on corporate Barbados.

“Because of the structural nature of our deficit and the significantly structural adjustments to restore equilibrium to our accounts, we will have a potential negative impact on your businesses and their bottom lines,” Sinckler said.

“If there is one truth that has emerged from the economic difficulty in Barbados, it is that too many of our private businesses are too heavily reliant on Government contracts for a large proportion of their income. It

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