Government’s 19-month fiscal consolidation programme faced with challenges
Financing and capacity are proving to be major stumbling blocks in Government’s efforts to meet the targets in its 19-month fiscal consolidation programme, with promised funds not yet allocated for several projects, and technical issues making it difficult to even begin others.
Of the 58 policies announced by Minister of Finance Chris Sinckler last August, more than half – 30 – have been implemented, and 16 are advancing, some more slowly
But, according to the second status report on the 19-month Fiscal Adjustment Programme circulated to members of the Barbados Private Sector Association last week, 12 are creating some concern for the Government.
The document, which was compiled following a monitoring and evaluation exercise in March, stated that while the implementation progress had maintained momentum, the challenges up to that point were due largely to “legislative requirements, finance allocations, and inputs required from multiple stakeholders”.
“The financial support/incentive aspects of the 19-month adjustment, particularly small grants initiatives and incentive schemes, are understandably taking longer to process given the overall impact on the expenditure position.
It specifically pointed out that although $7 million was promised to Invest Barbados to beef up its presence in the foreign direct investment (FDI) market, no funds were allocated in March and none included in the 2014/2015 Estimates.
Additionally, a proposal submitted to the Ministry of Finance for the creation of a $2 million grant initiative for small farmers to engage in crop production had received no response up to that point and therefore did not get the funds.
Plans for the sugar industry have also been affected. No progress was made up to March on providing higher investments in non-sugar crop production under the production grant incentive initiative for 2014.
The creation of a BNOC longer-term initiative with rum producers and BNOCL, as well as the utilization of excess alcohol as additives for gasoline have been plagued by issues related to supply and quality of ethanol and technical issues were “pervasive”, the report stated.
The report also highlighted other challenges, including staffing and human resource requirements, delays between conceptualisation, costing and implementation of activities in Government departments, lack of sufficient information underpinning policy/project formulation; and the involvement of multiple stakeholders in a strategic activity which represents a challenge on the timeliness of implementation given their various roles, responsibilities and priorities and required levels of coordination.
According to the report, there were also possible issues of duplication or overlap identified in areas such as branding of Barbados –– Invest Barbados, Barbados Investment & Development Corporation, and the Barbados Tourism Authority.
There was also concern about “a shortage in presentation by agencies and departments on innovative, technology-based or Internet-based, cost-effective and time bound solutions that can be implemented within the 19-month adjustment framework outside of the standard fiscal levers”.
The report also noted that Government was no longer seeking to procure a local company and tax law expert, on a consultancy basis, to handle tax law resolution issues and provide advice to the department.
The March update also noted that the announced 15 per cent tax on lottery winningsover $100,000 is still undergoing “reconceptualization”.
Back in November 2013, following reports in another section of the media that the tax had been scrapped, the Ministry of Finance said the tax would be implemented fully, with some changes, following the passage of the appropriate legislation.
The ministry said it had examined the concerns of industry players and would make the necessary adjustments to the original proposal and resubmit it to Parliament. At the time, it said it was putting the finishing touches on the proposal and the process would be completed in a few weeks.