Government’s inability to reduce its fiscal deficits is placing the international business sector at risk, according to the non-profit trade group which promotes Barbados’ international business relations.
The Barbados International Business Association (BIBA) points to a need for Government to reduce its spending in order to protect the island’s foreign reserves as a reflection of “a sad economic reality” for the country.
In a document apparently written before Governor of the Central Bank of Barbados Dr DeLisle Worrell presented his economic review last week, BIBA President Gregory McConnie made no mention of the review.
However, he referred to the bank’s newsletter of the first week of January in which Worrell had warned of the need for Government to cut spending further in order to protect the foreign exchange reserves, saying that statement suggested the economy was in a sad state.
“Much of the situation is driven by the inability of the Government to adequately address the fiscal deficits that are continuing year after year. These have undermined the ability of the country to borrow at attractive interest rates and shaken the confidence of foreign investors looking to make significant investments,” McConnie wrote.
He also shared the view of BIBA’s Executive Director Henderson Holmes that the continued downgrades could deal a devastating blow to the island’s attractiveness as a jurisdiction in which to do business.
In last week’s economic review, Worrell noted that the number of international business companies had declined by about five per cent as at October 2016.
“While foreign investors operating international business entities are in many ways isolated from the foreign reserves and domestic economy issues, they are still impacted by some of the knock on effects including the deteriorating infrastructure and potential social issues that can arise from a depressed economy,” McConnie warned.
“Through all of these challenges, it may be difficult to maintain a positive outlook for our economy and more specifically, the international business sector.”
Still, he said, Barbados had many attributes that made it attractive to international investors, including a stable political system, a solid infrastructural base, mature financial institutions, and a well-balanced regulatory environment.
However, he said in order to continue to capitalize on those attributes the authorities must make it easier to do business here.
He said the sector contributed over $1 billion to the economy annually, but there were opportunities available for it to do even better.