The year 2016 proved to be another challenging one for the Barbados economy, having suffered two downgrades and less than favourable growth.
There was also some restructuring in the private sector, as well as burgeoning complaints of slow pace of business facilitation.
The population was also made to dig deeper in their pockets and fork out more as some old taxes took effect or continued, established ones were raised and one new tax was introduced.
The bright spark in the economy, however, was the tourism industry, which continued to perform slightly above expectation throughout the year.
One of the more wide-reaching economic events this year was the August 2016 Financial Statement and Budgetary Proposals, that would create an impact on the entire population.
During that presentation Minister of Finance Chris Sinckler unleashed a two per cent National Social Responsibility levy, as Government aimed to raise in excess of $100 million in revenue per year.
That levy followed two other taxes that were announced in June 2015.
As of January this year Barbadians started paying an additional 4.5 per cent Value Added Tax (VAT) on their cellphone use, bringing that VAT to 22 per cent. That measure was expected to rake in approximately $32.7 million annually.
This was coupled with the ten per cent tax on sweetened beverages that was also announced in June 2015, and started that same year.
In addition this year, the bank asset tax was increased from 0.2 per cent to 0.35 per cent retroactive to April 1.
It was not all vexing news in the Budget presentation this year though, as Sinckler announced a special $50 million fund to provide a blend of grants and soft loans to the small and medium sized business sector.
As for economic growth, at the beginning of the year Central Bank Governor Dr DeLisle Worrell set the bar at 1.8 per cent growth in Gross Domestic Product (GDP) for 2016.
However, by October the Central Bank had revised downwards, its outlook for economic growth for this year to 1.4 per cent, and growth in the order of two per cent for the next five years, up from the 1.7 per cent projection at the start of the year.
For the first nine months of 2016 the economy grew by an estimated 1.3 per cent, mainly due to improvements in tourism, construction and business and other services. The unemployment rate stood at 10.2 per cent up to June.
It was revealed that between April and September this year, a total of $326 million was borrowed from domestic sources, including $91 million from the National Insurance Scheme and $4 million from insurance companies and other non-bank investors.
In addition, there was an $84 million switch from foreign to domestic financing because of amortization of foreign loans, which resulted in the Central Bank financing Government programmes to the tune of $114 million.
As at September 2016 gross Government debt stood at about 108 per cent of GDP.
But the high debt, low growth and taxes were not the only concern for business officials and Barbadians on a whole.
At the beginning of April this year Barbados’ government bond rating and issuer rating was downgraded to ‘Caa1’ from ‘B3’with a stable outlook by international ratings agency Moody’s Investor Services.
The ratings agency said the move was driven by slow progress towards achieving fiscal consolidation consistent with a sustainable debt trajectory, as well as low level of foreign exchange reserves and weak funding conditions.
Five months later the country was slapped with another downgrade, making it even more difficult for Government to secure favourable borrowing conditions on the international market.
This time, the economic downgrade came from the Washington based Standard & Poor’s (S&P).
That ratings agency lowered its long-term foreign and local currency sovereign ratings of Barbados to B- from B, saying it was concerned that the island’s fiscal adjustment programme again fell short of stemming another increase in debt to GDP, which is already very high.
S&P also issued a negative outlook for the island, while expressing concern over the Central Bank’s continued financing of the Government’s deficit, exacerbating Barbados’ financial and external weaknesses.
However, Sinckler continued to fend off the downgrades, saying Barbadians should continue to see the proverbial glass as half-full instead of half-empty.
A defiant Sinckler urged the country to see the current circumstances, “not through pessimistic lenses”, while acknowledging growing concern about the state of the economy.
A range of industrial relations disputes and actions rocked the local landscape this year causing concern to the business community.
The productive sectors were also affected by environmental issues including a pile up of garbage across the island, and just recently problems relating to a sewerage plant on the south coast, with businesses and tourism officials expressing grave concern.
Just this month the country was also placed on a blacklist by the UK-based aid and development charity Oxfam as one of the world’s 15 worst tax havens. This was met with strong objection from Minister of Industry, International Business, Commerce and Small Business Development Donville Inniss.
The international business sector was also given a shock in 2016 when the 2016-2017 Global Competitiveness Report placed the island at 72nd out of 138 countries when it came to competitiveness.
The World Economic Forum’s report, which provides insight into the drivers of countries’ productivity and prosperity, showed that Barbados had slipped 17 places since 2014. The report also listed several problematic factors which hinder the smooth flow of doing business on the island, including “poor work ethic in the national labour force” and “inefficient Government bureaucracy”.
However, while not dismissing the report Inniss, made it clear he would not be losing any sleep over such information, while pointing out that work was continuing to correct the problems relating to business facilitation.
In 2016 beverage manufacturer Banks Holdings Limited (BHL), through its new parent company – Brazilian beer giant AmBev – embarked on a restructuring programme, including reducing the size of its top executive management team and severing 48 employees.
Throughout the year there were also fluctuations in the prices for gasoline and diesel.
However, on the brighter side, the island’s bread and butter tourism industry continued to be buoyant.
Minister of Tourism Richard Sealy announced that the industry was performing beyond expectation and was on course to shatter last year’s record of about 592,000 tourists.
The country also welcomed news this year that the international community no longer viewed Barbados as “partially complaint”, but as “largely compliant” when it came to transparency and exchange of information, which significantly improves its chances of attracting major investments.
In May the business sector also welcomed Prime Minister Freundel Stuart’s announcement of the appointment of Senator Darcy Boyce as the Government assigned point man for business facilitation.
President of the Barbados Chamber of Commerce and Industry (BCCI) Eddy Abed said he was confident that Boyce had the ability to tackle the private sector issues head-on.
Throughout the year students from across the island welcomed a number of career showcases.
And the promising renewable energy sector also continued on a positive path this year with a first-of-its-kind Caribbean Sustainable Energy Independence conference, which was hosted by the Barbados Renewable Energy Association.
Government also announced a revised target of 65 per cent of its power from renewable energy sources by 2030, and a 22 per cent reduction in electricity consumption by 2019.
There was an initial target of 29 per cent of all electricity consumption to be generated from renewable energy sources and a reduction of 22 per cent in electricity consumption by 2029.
While Inniss described this year as a challenging one for businesses, he told Barbados TODAY he was optimistic about 2017.
However, he quickly pointed out that this would take a lot more than mere talk and hope.
“From a government perspective we have to continue to work assiduously on reducing the level of bureaucracy; becoming more customer focused; being more respectful of private enterprise – that goes both ways; getting much of the projects we talk about going off of people’s desks and get physically things happening. The country needs feel excited,” Inniss said.
“I am very optimistic about 2017, but not complacent. It is not going to turn around to the point we want it to unless we are all committed – public and private [sector] and the trade unions – to make it happen, and not just commitment in terms of words but in terms of action,” he stressed.