. . . but mainly to support debt servicing and state transfers
The Freundel Stuart administration is projecting $4.5 billion in spending for the financial year 2017-2018, up from $4.3 billion last year, with a whopping $1.8 billion set to go towards repayment of principal and interest on Government’s outstanding loans.
Despite all the recent talk of privatization and the need for Government to sell-off state assets, a further $1.1 billion has been put aside for in the coming this year, which begins on April 1, in support of statutory entities which are the main beneficiaries of state transfers.
In fact, only a meagre 2.5 per cent — or $29.3 million — has been trimmed from these allocations, even though the Stuart Government remains hard-pressed to find much-needed revenue to support an overall economic turnaround on the back of last week’s downgrade by international ratings agency Standard & Poor’s — its 18th since the Democratic Labour Party took office nine years ago.
However, amid worries about its dwindling foreign reserves which fell below the standard 12 weeks of import cover to less than $700 million in December, Government’s earnings continue to fall short of requirements.
This coming year state revenues are projected to reach $2.9 billion — up slightly from fiscal 2016/2017 — but this will still not be enough erase to the running deficit, which, based on the Estimates of Expenditure and Revenue, which were laid in Parliament Tuesday by Minister of Finance Chris Sinckler, is due to decline to $422 million or 4.4 per cent of GDP.
Last year Government had projected an overall deficit of five per cent of GDP (based on accrual reporting). However, up to last week, Sinckler was still reporting a shortfall in the order of eight per cent of GDP, which he was hoping to get down to 5.5 per cent of GDP in the short term.
Interestingly no provision has been made for any increase in salaries, even though public sector unions have been clamouring for such a hike. However,Government will be seeking to take forward promised payments to policyholders and investors in CLICO International Life and British American Insurance Company Limited, with a provision in this year’s Estimates for $25 million in payments for CLICO and a further $4.96 million for BAICO.
However, it was not immediately clear how the monies would be allocated even though Sinckler had earlier promised to bring the matter to a final conclusion for those who were left in the lurch following the collapse of CLICO and BAICO’s Trinidad-based parent company – CL Financial – back in 2009.
This year’s Estimates also make provision for a large subvention of $146.3 million to the state-run Queen Elizabeth Hospital — the same allocation that was made in fiscal year 2016-2017. The sum of $12 million is to be provided again this year to the Barbados Drug Service for the purchase of drugs, while the Welfare Department is also to receive another $19 million in this year’s Estimates.
The vital tourism sector is also guaranteed strong fiscal support based on an allocation of $87.7 million (which is down slightly from $89.9 million) to the Barbados Tourism Marketing Inc. and a further $8.6 million to the Barbados Tourism Product Authority, which was previously allocated $9.1 million. This has nothing to do with the $45.9 million, which has been provided for the redevelopment of Sam Lord’s Castle, which is nearly half of the $80 million budget that was attached to its transformation into a high-end Wyndham during fiscal year 2016-2017.
The Estimates also include $15 million for road rehabilitation and the same amount for externally funded Barbados Water Authority projects.
In the meantime, grant funding in the amount of $15 million is to be received as budgetary support and to assist Government in carrying out renewable energy programmes, refurbishment of the gymnasium and higher education development projects.
Under the head of education, the subvention to the University of the West Indies remains fixed at $71.3 million, while the Ministry of Education’s Skills for the Future programme is assured of $11 million this year.
A current subvention of $26.6 million and a capital subvention of $2.4 million have been provided to the Sanitation Service Authority which was allocated $29.6 million last year; while $13.5 million will go to the Public Sector Smart Energy Programme, up from $11.5 million.