Another slowdown

Central Bank revises its growth forecast for 2017

The Barbados economy, which grew by an estimated 2.2 per cent during the first half of this year, is expected to slow by the end of 2017.

Acting Central Bank Governor Cleviston Haynes gave the revised projection today as he addressed a meeting of the Social Partnership at the Barbados Hilton Resort.

While suggesting that growth would be “in the region of 1.3 per cent to 1.8 per cent, compared to earlier estimates of 1.5 to 2 per cent”, Haynes explained that the economy remained very challenged with the international reserves plummeting to $635.5 million or just 9.7 weeks of import at the end of June.

This is even further below the 12-weeks benchmark, from the $705.4 million or about 10.7 weeks of import as at the end of March.

Making a presentation to Government, private sector and trade union leaders that was also nationally televised, Haynes said the drop in reserves was due mainly to Government’s expected external debt service obligations and the ongoing delays in securing planned foreign investment inflows.

He said while the foreign exchange reserves were “still manageable” the situation still offered no comfort as it could put further strain on the island’s ability to maintain its 2-to-1 peg to the US dollar.

Haynes warned that even if the reserves should rise in the third quarter, they were expected to dip again at the end of the year due mainly to debt servicing and should therefore be dealt with as a matter of priority.

“From a comfort perspective we want to see our reserves at a much higher level. One of the key policy objectives for us is to maintain the exchange rate stability and that has been one of the bulwarks of the strength of this economy over the years and therefore as part of the effort to maintain that exchange rate stability you need to ensure you have an adequate reserve buffer at all times. Therefore, at 9.7 weeks, although it is manageable it is still a situation which we need to address as a priority going forward,” said Haynes.

“While we have balance of payment issues and we need to build our reserves, a lot of the fiscal adjustment right now is being driven by financing issues and therefore we need to find a way of addressing the financing issues,” the acting Governor candidly said.

Explaining that there was now a lack of fiscal space to drive the economy, Haynes further warned that it was “very important for us to be able to restore some sort of rectitude to our public finances”.

He also reported that even though Government’s expenditure, especially on wages and transfers, had declined somewhat, it was still too high, while cautioning that improved efficiency was needed within state-owned enterprises.

Further highlighting the challenges, Haynes said receipts from tourism, which is the mainstay of the island’s economy, were simply not keeping pace with arrival numbers. He also pointed to increasing oil prices and the island’s food import bill.

In terms of Government’s revenue, Haynes said that continued to be challenged due to lower collection of Value Added Tax, corporation and other taxes.

At the same time, he acknowledged that Government was also guilty of not paying what it owed because of its own financial difficulties.

And while the Freundel Stuart administration has managed to rake in some additional revenue from the recently increased National Social Responsibility Levy, there was a reduction in the PAYE, something which the acting Governor said needed to be investigated given that unemployment figures had gone down.

On the expenditure side, he said interest expenditure had gone up while non-interest expenditure had fallen.

Though supporting the sale of assets, Haynes acknowledged that Government assets could only be sold once. Therefore, he said a strong medium-term strategy remained relevant.

“At some point we have to make decisions which reflect our capacity at this point. There are some medium term structural issues that clearly need to be addressed. We talk about asset sales, the asset sales are very critical to both to the fiscal outturn as well as the international reserves outturn,” said Haynes.

While acknowledging that he was in no position to tell Government exactly how to close its fiscal deficit, he suggested there were a number of options available while pointing out that “we face significant challenges, we continue to have low growth, our reserves are not where we want them to be, the fiscal deficit has to be addressed and in so doing that will help to slow the rate of debt accumulation”.

marlonmadden@barbadostoday.bb.

10 Responses to Another slowdown

  1. Jennifer August 12, 2017 at 5:03 am

    We need to be real. If this above article is correct coupled with this an increase in crime we can only be headed for blood shed as Barbados heads to an increase in unemployment. Brace yourselves.

    Reply
  2. David Hall August 12, 2017 at 6:14 am

    All the more reason why Government ministers should be ashamed and repentant over insisting that they get back their 10% in salary;which they had supposedly given up to show ‘solidarity’ with those who have not had an increase for years.

    Reply
  3. Kaiser Sose
    Kaiser Sose August 12, 2017 at 7:17 am

    Did you know BARBADOS just made the #7 best Caribbean nation to find a WIFE &HUSBAND how about promoting that as a tourist attraction. I need to be the minister of tourism and business developement.VOTE FOR ME BIM im coming home to save the day.Ancestral home Draxhall hope/Melverton ST.George
    ALGY BELLAMY SIMPSON for PRIME MINISTER.

    Reply
  4. Joan Brome
    Joan Brome August 12, 2017 at 7:47 am

    De poor man who at de bottom just slaving day in and day out for nothing ppl just fed up.and disgusted wid de system. You working and you can’t even buy a pack of.bacon coz when you done pay bills and taxes you back at square one. Gimme a break what you expect will happen? De man that getting whopping saleries and still pilfering can eat and.drink and belch hard and don’t give two f******s how somebody else getting through dem hardships.

    Reply
    • Jennifer August 12, 2017 at 10:58 am

      @Joan Brome – You made my morning with ur post. Could not stop laughing. Although this ain’t no joke.
      You now realize????? but I always say better late than never. The other DELUSIONAL LOT who THINK them escape only got champagne taste and mauby pockets and making big mortgage and car loan payments. Been so since slavery sis.

      Reply
      • Jennifer August 12, 2017 at 11:05 am

        Actually things have gotten worst since slavery, in slavery you were given a small patch of land to plant to feed yourselves so as not to eat the ma$$a goods aka profits, but this people have literally kicked planting into the long grass and is complaining about supermarket prices. Keep going to the animal for everything. Have taken on a lot of unnecessary bills from the same animal to live “posh”. How many of this people have in a land line and two mobile phones topping up or carrying data plan????

        Reply
  5. Michael Crichlow
    Michael Crichlow August 12, 2017 at 8:18 am

    Kaiser Sose are opening a dating service also to accommodate finding a wife and husband as ?

    Reply
  6. samantha walker August 12, 2017 at 10:18 am

    @ Joan Brome, if you dont know your history your are “PRONE” to repeat it….. We came from slavery with nothing and in 2017 we in the same cycle as our ancestors. Trust me, we are African descendants, the same ones that were enslaved. Hence we have no backbone to fight those in power and no money to do much more than feed ourselves….. Get the TRUE picture now !!

    Reply
  7. Roger Headley August 12, 2017 at 12:37 pm

    Cleviston boy I don’t envy you – you tried to follow the mandate given to you yesterday but attempted to maintain your credibility by putting in a few extra things. Boy your career more important than the MoF or the PM here. They will go back to their professions in due course but this is yours – you have nothing to go back to when they are yesterday’s news

    Reply
  8. Jus me August 12, 2017 at 3:47 pm

    All Inclusives!
    And
    Politicians.

    Study both carefully.
    How obvious does it needs to be to you
    WHY Barbados is in the state its in.

    All monies paid for a holiday in Barbados
    MUST BE paid in Barbados.
    Duty Free concessions stopped.
    None gets passed on to the customer.
    Simply added to the Offshore Bank account
    That also.collects the booking payments.

    Politicians syphon off whats left
    None, can be trusted.

    I see we can deal with the all inclusives.

    Politicians are the cancer we all will finally die from.

    Barbados with its current tourist numbers,can generate,more money than is needed to give us all a decent standard of living, IF
    It actually arrives with tourists and is spent here by them

    Reply

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