The gap between Government’s expenditure and revenue for the 2015/2016 financial year is not as bad as previously thought, Minister of Finance Chris Sinckler revealed today.
Sinckler announced at the start of a Project Exit workshop for the modernization of the Barbados Statistical Service at Baobab Tower that the fiscal deficit, which was previously reported at seven per cent of Gross Domestic Product (GDP), had been revised downward.
“I met with my senior staff yesterday [Tuesday] in reviewing of our fiscal position over the last two fiscal years. We reported for example, based on the preliminary data that we had, that our projected deficit for 2015/2016 over 2014/2015 was seven per cent. It has turned out now that the Accountant General has finished his analysis and has reported that the deficit is actually 5.8 per cent,” he said.
This puts Government in a position to do even better than the 4.4 per cent forecast last month by the Central Bank for the current financial year after the August fiscal adjustment measures.
The bank’s initial review put the fiscal deficit at 6.1 per cent of GDP up to August this year.
In announcing the improved performance, Sinckler reprimanded Barbadians for being critical of changes in economic reviews, suggesting they were not mature enough.
“In a place like the United States where they review statistics all the time and change them and nobody keeps any noise about that because they are mature enough to understand that while you get preliminary and provisional reports . . . it is subject to be updated once further statistical information is received. In more mature democracies and societies these are regular norms that are executed,” the minister said.
However, he contended, the situation was different here, as “people say that you are fidgeting with the statistics and changing them to suit a particular narrative and we need to move away from that level of understanding and reaction to how statistics work”.
Sinckler, who has come under pressure over the performance of the local economy, warned that it was critical that statistics collected be carefully analyzed and
updated as required.
“As one person would say, it is not a barbeque pigtail where you brush it with some BBQ sauce and take it off [the BBQ grill] and then you are ready to eat it. It has to be done properly. It has to be done correctly so that when it is produced that the integrity of the system remains. And the way you get that is not to focus on who is delivering the information but to focus on the strength of the structure that is put in place, the legislative, administrative, IT [information technology] and so forth and so on, to ensure that the integrity of that system supports whatever they consult on,” Sinckler explained.
It was in early September that the Central Bank had given its strongest hint yet of a possible currency devaluation if Government failed to control the country’s massive fiscal deficit, warning that in order to continue to safeguard the current exchange rate of BDS$2 to US$1, a smaller deficit was critical.
“A smaller deficit would stabilize our foreign reserves, safeguard the peg and arrest the growth of debt so that it falls below the growth of GDP [gross domestic product],”
the bank said at the time.