FULL TEXT of the latest IMF Barbados review (released today)

The International Monetary Fund (IMF) said today it was ready and willing to come to Barbados’ rescue, while warning that slower growth and a doubling of the domestic cost of living were on the immediate horizon as a result of the austerity measures announced by Minister of Finance Chris Sinckler in his May 30 Budget.

Following is the full text of the IMF statement:

  • The Barbadian economy continues its recovery on the back of stronger tourism performance but improving public finances remains a critical challenge.
  • Economic growth in 2016 is estimated to have been 1.6 per cent and to have accelerated in the first quarter of 2017 to 2 per cent.
  • The IMF stands ready to assist the government of Barbados through continued policy dialogue and technical assistance.
Judith Gold

At the invitation of the authorities, an International Monetary Fund (IMF) team led by Judith Gold visited Barbados from June 20–29 to review recent economic developments and discuss the 2017 budget. At the end of the visit, Ms. Gold issued the following statement:

“The Barbadian economy continues its recovery on the back of stronger tourism performance, but improving public finances remains a critical challenge. Economic growth in 2016 is estimated to have been 1.6 per cent and to have accelerated in the first quarter of 2017 to two per cent. The stronger economic performance has supported a reduction in the unemployment rate to 9.7 per cent in 2016 from 11.3 percent in 2015. Inflation started to pick up in the second half of 2016 after deflation in 2015, and on a point-to-point basis reached 3.2 per cent by end-December 2016 mainly due to higher food prices.

“The current account has further narrowed by 2 percentage points to 4.5 per cent of GDP on the back of improved tourism receipts, a robust increase in exports, and low oil prices. Notwithstanding this improvement, international reserves fell to B$682 million by end-2016, about two months of imports. Delayed official loan disbursements and privatization, as well as lower private-sector inflows, were key drivers of this decline. Net International reserves remain relatively low.

“There was some progress in reducing the fiscal deficit in FY2016/17, which is estimated to have declined to 5.5 per cent of GDP from 6.8 per cent in FY2015/16. The majority of the adjustment was generated by lower government spending, while fiscal revenues held steady. Despite this progress, the large government financing requirements were a challenge, as banks reduced their sovereign exposure. As a result, the government had to increasingly resort to funding from the Central Bank of Barbados (CBB).

“Growth in 2017 is projected to slow to less than one per cent, reflecting the fiscal consolidation efforts introduced in the FY2017/18 Budget. Inflation is expected to continue to accelerate to 6.7 per cent by year end because of the increase in the National Social Responsibility Levy (NSRL) and other taxes and fees, but revert to more historical norm in 2018 and subsequent years. There are important downside risks related to the increase in domestic and global uncertainty, including the impact of the Brexit on the British pound.

“Continued fiscal discipline, with economic growth, are essential to securing Barbados’ future. They will be critical to bolster international reserves and support the currency peg. Only a substantial and a sustained reduction in the fiscal deficit, which will put the debt-to-GDP ratio on a solid downward path, will restore the country’s credit rating and attractiveness to investors.

Minister of Finance Chris Sinckler

“The May 30th budget accelerates the pace of adjustment. It seeks to address the fundamental imbalance between revenues and expenditures that has characterized Barbados’ public finances in the past decade, and to significantly reduce new funding requirements. The budget is primarily focused on raising revenues while shoring up international reserves, including through an increase in the NSRL—which mostly impacts imported goods—from two per cent to ten  per cent. The government also plans cuts in current expenditure, to complete ongoing privatization efforts, and to undertake new divestments. In addition, the government seeks to initiate a voluntary exchange of debt instruments with the National Insurance Scheme and the CBB to reduce the interest bill. If implemented as envisaged, the 2017 budget would lead to substantial gains toward improving public finances.

“Over the medium-term, further fiscal adjustment would be needed on the expenditure side to decisively reduce debt and debt service costs. Transfers to public enterprises of close to eight per cent on an annual basis represent the second largest expenditure item, after the wage bill, and about the same magnitude as the interest bill on the public debt. Both expenditure categories weigh heavily on public finances and critical reforms are needed over the to restore sustainability and confidence. Reduction in transfers to public enterprises must be supported by structural reforms to reduce SOEs’ operating costs, rationalize their programs, and raise their revenues. Consideration should also be given to divesting commercial SOEs that can be run more efficiently and profitably by the private sector. Other structural reform, especially those focused on improving the investment climate and fostering growth are also critical.

“The IMF stands ready to assist the Government of Barbados, including through continued policy dialogue and technical assistance. The team would like to thank the authorities, technical staff, representatives of civil society, and the private sector, for their open discussions and constructive dialogue.”

The mission met with Minister of Finance and Economic Affairs Christopher Sinckler, Minister of Industry, International Business, Commerce, and Small Business Development Donville Inniss. Acting Central Bank Governor Cleviston Haynes, the leader of the opposition Mia Mottley, senior government officials, and representatives of the private sector. (Ends)

20 Responses to FULL TEXT of the latest IMF Barbados review (released today)

  1. Ali Baba
    Ali Baba June 29, 2017 at 11:55 pm

    JUDITH GOLD WHERE IS THIS RECOVERY THAT U TALKING BOUT? SHOW SOME FIGURES TO LET US SEE THIS STRONGER TOURISM, AND THE UNEMPLOYMENT. LOOK I KNOW WANNA WANT TO HELP DE SLAVES THAT RUNNING PARLIAMENT…..BUT OUR GDP IS REALLY GROSS DOMESTIC PROBLEMS

    Reply
  2. hcalndre June 30, 2017 at 1:43 am

    By any means necessary says Chrisie. Paying taxes on food items are a sure way because if you don`t eat you would die some how from something.

    Reply
  3. chris hill June 30, 2017 at 6:28 am

    These figures of growth are not hitting the man on street level. Unless Sinclare dials back the NSRL there is going to be a massive inflation rate especially in this tourism low season is going to have catastrophic effects on the society in general.

    Reply
  4. Carson C Cadogan June 30, 2017 at 6:44 am

    I know that this report will cause heart burn for the Barbados Labour Party and its operatives.

    If one follows the pronouncements of the Barbados Labour Party and their operatives including those in the Bajan news media, one would come to the wrong conclusion that Barbados is the worst place on the Earth.

    The TRUTH is far from supporting their position.

    Reply
    • harry turnover June 30, 2017 at 7:10 am

      ….and every one a DEM still gine through the eddoes next year as though people like you gine see this IMF report on the ballot boxes,same sex marriages and pictures of Barrow and Thompson lining the walls of the Polling Stations.
      CCC… people gine be so vex polling day that they gine be seeing RED,MANY will not sleep the night before cause they want to RING IN ELECTION DAY like they ring in the NEW YEAR…a NEW DAY beckons one and all …big man.
      Stuart gine come OUT now and say yeh yeh we were doing the right things from day one .
      On Election night I hope that the TVs’ political yardfowl doesn’t plan to stick around when she sees the writing on the wall hoping to interview the NEW PM otherwise she will be asked to move along and let the new YARD FOWL take her place.

      Reply
  5. Saga Boy June 30, 2017 at 7:39 am

    @harry turnover. You are pure emotion. Nothing of substance.

    Reply
  6. Zeus June 30, 2017 at 9:43 am

    Harry I was impress with some of your postings some months ago but you sound like a desperate man at present …..man in you feel that the BLP is going to win by a landslide be patient …..you coming over like there is some doubt in your prediction

    Reply
  7. Donild Trimp June 30, 2017 at 10:14 am

    “The May 30th budget accelerates the pace of adjustment. It seeks to address the fundamental imbalance between revenues and expenditures that has characterized Barbados’ public finances in the past decade, and to significantly reduce new funding requirements” ————————— “If implemented as envisaged, the 2017 budget would lead to substantial gains toward improving public finances”.

    The above is what is important for Barbadians to focus on and the reason why the DLP will win the next elections.

    None of the other parties can come up with a rebuttal to the above statements.

    Reply
  8. seagul June 30, 2017 at 10:38 am

    With a name like Donald no one can be taken seriously…big words signifying only fury and a smoking gun finances.
    The IMF spells danger but, —here we are sitting, waiting for masa to fly in as golden tourists with their eggs.

    Reply
  9. Donild Trimp June 30, 2017 at 11:12 am

    @ seagul ——- are you some kind of imbecile?

    This is what you wrote: ” —here we are sitting, waiting for masa to fly in as golden tourists with their eggs”.

    How can you draw that inference from the statements quoted above?

    You also need glasses. My name is Donild.

    How can you infer from the statements I quoted above

    Reply
  10. jrsmith June 30, 2017 at 12:28 pm

    Why can anyone not think that the (DLP) wouldn’t win the up coming elections,there is no real opposition to them, they have fooled the black bajan masses for 2 terms so why not the third ,
    The government have made sure the position they are in , means, they are not accountable to the black masses in barbados … the only real thing they have done is increase taxes, so barbados is now a failed economy based on taxes……………………………
    ************************************************
    What would be the out come when the government is back in power , same old, same old……………………………………..

    Reply
  11. seagul June 30, 2017 at 1:53 pm

    OK mr Trimp or whatever your name is. Speak on the IMF and your political agents….

    Reply
    • Helicopter(8P) June 30, 2017 at 3:33 pm

      A task is ahead for whom ever the bell tolls. May it be A,B or C. The world economic times are not a decade ago. The island ‘s economic planning has to be prognosis for an acute future checks and balances have to be accomplished it’s not a party thing but a national interest.

      Reply
  12. Tee white June 30, 2017 at 2:32 pm

    Barbados Today, is there a reason why you are not publishing my comment? I have already posted it twice today.

    Reply
  13. Bunn June 30, 2017 at 4:25 pm

    Let us face it, 8 years of nothing to show except more taxes on taxes and tourism is just as fragile as an outbreak of a cold.

    Show me the strategies other than taxes to get out this mess your 8 years of taxing us to be slaves is not working for you DLPs!

    Reply
  14. Bunn June 30, 2017 at 4:28 pm

    Let us face it, eight years of nothing to show except more taxes on taxes and tourism is just as fragile as an outbreak of a cold.

    Show me the strategies other than taxes to get out this mess. Eight years of taxing us to be slaves is not working for you DLPs

    Reply
  15. sticks and stones June 30, 2017 at 5:08 pm

    the angry BLP crowd got to suck this news up , but No they would rather believe in a fake poll

    Reply
    • Sunshine Sunny Shine June 30, 2017 at 6:44 pm

      Fake poll my azz. You do not even need a poll to know how bajans feel about the DLP. Everyone is talking about them in the worst way. Even those living abroad. Everything that comes out of bajans mouths is: they either not voting or they will never vote for the DLP again. That is not a poll that is what many bajans here abroad are saying.

      Reply
  16. Peter Thompson June 30, 2017 at 7:56 pm

    Barbados Today has made a huge error in the intro paragraph. The IMF did NOT warn of “a doubling of the domestic cost of living…” What the IMF wrote was “… domestic inflation, which stood at 3.2 per at the end of last year, was likely to accelerate to 6.7 per cent by the end of 2017.” This is a doubling of the inflation rate NOT a doubling of the cost of living. A doubling of the cost of living in one year is an inflation rate of 100%, not 6.7%.

    Reply
  17. joan Worrell June 30, 2017 at 8:37 pm

    Dear Kaymar

    Kindly revisit your report published yesterday and compare it with the full statement of today.

    Let us help, says IMF
    IMF willing to come to Barbados’ rescue
    Added by Kaymar Jordan on June 29, 2017.
    Saved under Local News

    Today’s
    FULL TEXT of the latest IMF Barbados review (released today)
    Added by Barbados Today on June 29, 2017.
    Saved under Business, Economy, Local News

    Yesterday”s was one of doom and gloom whereas today’s is one of hope. Which should I believe? Was yesterday’s a figment of somebody’s imagination (fake news) and today’s the verbatim report (real news)?

    Reply

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