Government’s retrenchment of thousands of public sector employees has put an estimated $20 million back into the Treasury and the Central Bank of Barbados is saying that the fiscal adjustment measures under which the job cuts were made, appear to be working.
However, Central Bank Governor Dr Delisle Worrell said today that unemployment has been rising because of the ongoing retrenchment programme.
Reporting on the current state of the economy, Dr Worrell told the country that even though the average rate of unemployment over the four quarters ending March was 11.7 per cent and slightly higher than the previous year, the fiscal adjustment measures taken by the Freundel Stuart administration between August 2013 and March this year, seem to have started to restore the balance of infows and outflows of foreign exchange.
Dr Worrell also said that the foreign reserve trends for the first six month of the year had reverted to the pattern of the years from 2009 to 2012.
“Reserves declined by $51 million, compared to a fall of $119 million on average for those years. At the end of June, the stock of reserves stood at $1,093 million, representing 15.1 weeks of import reserve cover,” the Central Bank Governor added.
He also announced that the fiscal adjustment measures had dampened the demand for imports, resulting in them falling by 1.4 per cent for the first half of this year.
“The Fiscal Consolidation Programme yielded an estimated $51 million in the first quarter of the fiscal year. The Consolidation Tax brought in $9 million, and the tax on commercial bank assets $4 million,” Dr Worrell noted.
He revealed that grants to pubic institutions were also reduced by $9 million and outlays on goods and services declined by $9 million.
The bank head also disclosed that the overall deficit was down as well.
“The overall deficit for the first quarter was $214 million, $5 million lower than for the same period last year. The primary deficit for the quarter improved by $30 million to $21 million,” he stated.