Private sector officials are simply not impressed with the 2015 Financial Statement and Budgetary Proposals delivered by Minister of Finance Chris Sinckler in Parliament yesterday.
In fact, they said the Budget lacked clarity on a number of issues, including the reformation of state enterprises while failing to outline measures aimed at growing the economy.
They also warned that with the focus being mainly on revenue measures, and not a reduction in the state’s expenditure, this would only affect the Government’s ability to control its mounting debt.
The business leaders gave their assessment at this morning’s post-budget breakfast discussion convened by the Barbados Chamber of Commerce and Industry (BCCI) at the Lloyd Erskine Sandiford Centre.
BCCI President Tracey Shuffler said from the time of the Estimates, exactly three months ago, the Chamber had expressed concerns about an increase in Government’s spending, adding that she was surprised by the “void” in the Budget as it relates to cost-cutting measures.
“Quite frankly that is still our concern post-Budget, because having not heard specifically what some of the cost-cutting measures are, our concern is that the spending might actually increase, and that being the case, then we are not going to be making any progress that we would expect to on the fiscal deficit.
“That is one of our greatest concerns,” explained Shuffler.
The BCCI official also expressed concern that there was very little support in the Budget for the renewable energy sector, which is said to be in danger of losing jobs.
President of the Barbados Private Sector Association Alex McDonald said he was concerned about the Government’s ability to effectively implement the revenue-raising measures outlined by the Minister of Finance in his near four-hour presentation.
“When we look at the $200 million take and the $4 million give, it could not be a budget that [aims] to stimulate growth.
“What we saw was the minister plugging holes,” he said.
Chairman of the Barbados Hotel and Tourism Association (BHTA) Sunil Chatrani told the packed room the island was still lacking a clear economic growth strategy that should have been outlined by Sinckler.
“We need to see some policies in place to encourage investment and to encourage businesses to grow. We are doing quite the opposite at this stage,” said Chatrani.
He agreed with Shuffler that while there were some policies in place to assist various sectors, including small business, tourism, renewable energy and international business, the problem was one of implementation.
Economist and University of the West Indies lecturer Dr Winston Moore said the Budget was “clearly” an attempt to raise revenue rather than to cut expenditure.
While acknowledging that the country’s international reserves were above the global average, Moore pointed out that the Government’s debt continued to increase.
“Even though it is increasing at a slow rate it is still increasing and this budgetary presentation is about addressing those issues. The target primary surplus that you would need in Barbados to keep the level of debt constant is around one to two per cent of GDP. This budgetary presentation has that around two per cent of GDP. So if we can get all of these measures implemented this would actually reduce the level of debt in Barbados,” he said, though acknowledging that it would be difficult to achieve in the short term.
President of the Barbados Bankers Association Glyne Harrison said he was not satisfied with the information given regarding the restructuring of some Government enterprises. He said there needed to be more discussion regarding privatization and how that process would work to rein in the expenditure of central Government.
“In terms of the association we were looking for some information around the whole matter of deficit cutting and how we would go forward in terms of [managing] the debt,” said Harrison.
Both he and economist Ryan Straughn welcomed the announcement that a credit bureau would be established.
However, Straughn had “a fundamental problem with a loss-making Central Bank being the charge of a credit bureau”.
Straughn said he was concerned that the Government had lost credibility due to its lack of ability to implement when it said it would.
“Without specific targets that are achievable and definitive I don’t think the Government or anyone in this room can plan effectively,” said Straughn.
“Yes, the Government has reduced the fiscal deficit . . . but you do not use money that you set aside to pay principle in the future to finance deficit. So even though the deficit has come down, the question is how we are going to replenish those sinking funds without growth? So we have a serious debt problem that we are not addressing,” he lamented.
Chief Executive Officer of Banks Holdings Limited Richard Cozier said the mention of the reform of state owned enterprises was “the only evidence that there is going to be some sort of look at expenditure”.
However, he said until there was a detailed framework of how they planned to go about the restructuring, it was a matter of wait and see.
“The Budget really is a consolidation budget and not a budget for growth,” said Cozier.
Also adding his voice to the debate was former politician and executive director of the Institute of Chartered Accountant of Barbados (ICAB) Reginald Farley.
He said the three issues that needed to be addressed in the Budget were the Government’s fiscal position, the country’s debt position and strategies for growth and development.
“But clearly this was about the fiscal position only,” said Farley.
He also called for clarity on the reformation of the statutory entities.
Henderson Holmes, executive director of the Barbados International Business Association, expressed disappointment at the little mention of his sector in the Budget, saying that there were still a number of issues that needed to be addressed to help it to flourish.