With the Central Bank economic review mere days away, Prime Minister Freundel Stuart is already reporting a revised fiscal deficit for the 2017/2018 financial year.
Addressing the first Barbados Chamber of Commerce and Industry (BCCI) luncheon at the Hilton Barbados Resort today, Stuart said the fiscal deficit was expected to be reduced by a further three per cent.
“With the deficit closing last fiscal year 2016/2017 at around 6.8 per cent, it is anticipated that this gap will be closed by a further three per cent, therefore bringing the actual outturn very near to, or even surpassing, the intended target of 4.4 per cent set during the Budget estimates debate last year,” he said.
During last year’s presentation of the Estimates of Expenditure and Revenue, Minister of Finance Chris Sinckler had announced that Government was projecting $4.5 billion in spending for the financial year 2017/2018 and revenues of $2.9 billion.
This was expected to result in an overall decline in the deficit of $422 million or 4.4 per cent of gross domestic product (GDP).
However, last November the International Monetary Fund said that the chances of achieving the deficit target were slim to none as it warned of the need for “urgent” corrective action.
The IMF, following a two-week Article IV Consultation, had warned that without divestment proceeds, the deficit would only decline to 4.1 per cent of GDP in financial year 2017/2018.
And while Government was intent on achieving a surplus of 4.4 per cent of GDP in financial year 2018/2019, the IMF suggested instead that it should aim for a 7.5 per cent GDP surplus by financial year 2020/2021.
With that said, Government has been sticking to its projections made in the May 30, 2017 Financial Statement and Budgetary Proposals in which Sinckler had announced that Government was expecting to rake in $542 million from taxes, expenditure cuts, and sale of some state assets, in order to overcome a high deficit of $537.6 million, and achieve a small surplus of $4.4 million by the end of the current financial year.
However, this plan has been fraught with setbacks, including an underperforming National Social Responsibility Levy (NSRL), which was intended to rake in $218 million this financial year.
It was also anticipated that Government would earn at least $70 million as net proceeds from the Barbados National Terminal Company Ltd and $100 million from the sale of the Hilton Barbados Resort, both of which are yet to be finalized.
Government is also expecting $50 million from increase in excise taxes on gasoline and diesel; $52 million from the commission on the sale of foreign exchange and $25 million from tax amnesties.
On the expenditure side, Government was expecting to save $152 million.
Despite the hiccups, Stuart said today he was confident the fiscal deficit “is on the decline, and according to my advice, in a sizeable way”.
Stuart told the private sector grouping that the highly anticipated Barbados Sustainable Recovery Plan 2018 (BSRP), which is due to be laid in Parliament, would return the economy to “a path of steady state equilibrium with a view to propelling the economy to the pre-crisis growth level of three per cent on average”.
At the same time, the Prime Minister said he was expecting construction of the Hyatt Centric Hotel to commence this year.
He also assured the private sector meeting, which was attended by a number of diplomats and Government ministers, that Government would embark on more than $100 million in tourism related projects this year.
Following the Prime Minister’s pronouncements, Chief Executive Officer of the Barbados Private Sector Association (BPSA) Anne Reid told Barbados TODAY the private sector remained hopeful that the plans outlined by Stuart could be achieved.
She said BPSA was especially keen to see the BSRP implemented, which she said received significant input from the private sector.
“We expect that the oversight committee will be meeting quite soon and that really the work will start. There has been a lot of time and attention into getting that plan together,” said Reid.
“We continue to be hopeful for all the Social Partners working to effect work which needs to be done for Barbados at this time. At the luncheon today we heard the Government outline its position and we are hopeful too of another Social Partnership meeting. We will continue to do our part as a private sector for the growth and development of Barbados,” she added.
However, in his presentation BCCI Senior Vice President Ed Clarke warned that “time is running out” on the Barbados economy, and he called for “swift implementation” of measures agreed by the Social Partnership under the BSRP.
Clarke said the BCCI believed the country could fully recover “in short order” but stressed that “the difficult decisions must be taken by Government without any further delay”.
“More importantly that the corrective measures be implemented with the urgency required to rectify the crime situation,” he added, while calling for a quick resolution to ongoing environmental issues in order to protect the island’s reputation and residents’ wellbeing.