No need to panic!
Minister of Finance Chris Sinckler acknowledged today that Barbados’ fiscal deficit was still “too high”. However, he sought to reassure Barbadians that there was no “doomsday” scenario facing the island, as he warned his political opponents of the danger caused in constantly suggesting so.
Sinckler also assured that the Barbados dollar was not in any danger of devaluation, even in the face of what called a “stubborn” fiscal deficit and dwindling foreign reserves.
“It is not going to happen at no time in the foreseeable future,” he told reporters during a press conference at Government Headquarters.
In response to recent concerns raised about the state of the island’s foreign reserves which have fallen below the 12 weeks standard cover, the Minister of Finance said it was not the first time that such had occurred, pointing out that in 1998 the reserves fell to 9.1 weeks and in 1999 to 9.9 weeks of imports.
However, he said Government was committed to restoring the reserves to a “comfortable” level.
In this regard, he said a draw down was expected on the Sam Lord’s development project any day now. Sinckler also said Government had settled a loan with First Citizens from which proceeds were expected to flow in the coming days.
Sinckler, who was flanked by Government colleague Donville Inniss at today’s press conference, was also confident that final approval will be given to the SOL oil deal, which when taken with Sam Lord’s and First Citizens’ monies are expected to rake in some $200 million, pushing the reserves “well above” the desired 12 weeks of imports.
He also revealed that inflows in the amount of $30 million were expected from the Development Bank of Latin America, otherwise known as CAF, and a further US$35 million from the Caribbean Development Bank (CDB) to fund two water projects. Another $50 million in support is also due from the CDB for an education sector enhancement project.
Effective this month, the minister of finance said Government would be tightening up its foreign exchange monitoring.
However, as he prepares for the upcoming Estimates of Revenue and Expenditure, Sinckler assured that no major increases in taxes or major retrenchments were planned. However, he said in a bid to get the deficit down down from eight per cent to 5.5 per cent of GDP, Government was looking at proposals with a number of reputable financial institutions for the refinancing of certain aspects of its domestic debt.