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Fiscal hole

Barbadians will have to wait until at least another two years to see any pickup in economic growth, even as the country’s worrying fiscal deficit widened by $117 million and the crucial foreign exhange reserves record a decline of $447 million during the first nine months of this year.

This is just part of the picture reflected in the Economic Review for the third quarter of this year, presented today by Central Bank Governor Dr Delisle Worrell.

Worrell also told the nation that during this period the economy fell by an estimated 0.7 per cent as a result of decreases in production in both the traded and non-traded sectors.

“The foreign exchange reserves declined to $1 billion, a fall of $447 million since December 2012. However, reserve levels were adequate to cover contingencies such as this, and the foreign reserve cover was 13 weeks of imports as at the end of September,” reported the Governor.

He also revealed a startling decline in private foreign

investment in Barbados, blaming this for the weakness in the year, an increase of $638.5 million. However,

island’s foreign reserves. “The main contributing factor to the foreign exchange

weakness, has been the decline in private foreign investment, from $473 million, at September 2012, to $147 million at September this year,” announced Worrell.

He reported, too, declines in foreign earnings from tourism, other services, sugar, beverages and chemicals. Inflation, he pointed out, was 2.1 per cent at the end of July and the average unemployment rate was estimated to be 11.1 per cent for the first half of the year –– a fall of 1.0 percent.

“With the fiscal measures announced in the Budget not yet in effect, third-quarter Government revenues continued to be weak. Revenues are estimated to have been $140 million lower than for the April-to-September period of 2012,” added the Government advisor on economic affairs.

He went on to list a series of other revenue-earnings areas that had recorded decreases. For example, corporation tax receipts fell by $59 million and collections of VAT and personal income taxes, each fell by $35 million. The Central Bank Governor disclosed that spending was reduced, but by only $23 million, and the fiscal deficit widened by $117 million.

Worrell also informed Barbadians that the total public sector debt stood at $8.9 billion during the first half of this

there were some bright spots during the year –– energy and cruise tourism being the major ones. While the Governor reported declines in

visitor numbers from all major source markets, tourism value-added falling by 2.1 per cent and long-stay arrivals down 6.2 percent, cruise passenger arrivals went up 12.3 percent to the end of September.

He noted that output of energy generated from alternative sources is gathering momentum, with about four megawatts of electricity currently being produced by solar power. That, Worrell explained, was double last year’s level.

“This level of energy output represents an estimated $3 million in foreign exchange savings so far this year.”

He said, too, that an assessment of the financial system over the first six months of this year revealed it to be generally stable, with well-capitalized institutions. The top economist asserted that liquidity continued to be high, and entities were generally proitable, though with lower profit margins.

The Governor pointed out that while credit quality declined further at banks, credit unions and non-bank institutions experienced no increase in their non-performing loans. For banks, he stated, the deterioration was mainly in the personal mortgage and real estate portfolios. (EJ)

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