Minister of Finance Chris Sinckler today presented a budget which reflected a $1.4 billion deficit for the 2018/2019 fiscal year.
In the Estimates of Expenditure and Revenue laid in Parliament today, Sinckler projected that Government would spend $4.5 billion, the same amount projected for the current financial year, but would receive $3.1 billion in revenue, higher than the projected $2.99 billion for the 2017/2018 fiscal year, which runs until the end of March.
The Estimates came a week after Central Bank Governor Cleviston Haynes announced that the island’s foreign exchange reserves had slumped to just 6.6 weeks of import cover, or $410 million at the end of December last year,and had urged the administration to “continue to build on the gains it has made on reducing the fiscal imbalance” for fiscal year 2018/2019, arguing that “further consolidation, particularly through structural expenditure reforms and improved tax administration, is now required. “Effective implementation of these measures would help to prevent further accumulation of arrears which will aid in restoring confidence and facilitating private sector activity,” he had advised.
The International Monetary Fund (IMF) had also warned that the economy would slow to a jaundiced 0.5 per cent growth this year, and had emphasized the need for a comprehensive restructuring of state owned enterprises, saying this was critical in order to address structural imbalance in the public sector, “in particular by reducing Government transfers”.
Yet, a large chunk of expenditure will go towards transfers, although the $1.1 billion set aside for this purpose is $74 million less than the amount budgeted for the current year.
With Government’s overall debt standing at 145.9 per cent of gross domestic product (GDP), the Estimates make provision for $1.8 billion for the repayment of principal and interest on outstanding debt.
“When amortization of $1.04 billion is taken into account, a deficit of $321 million on the cash basis is expected, representing 3.3 per cent of GDP,” the Ministry of Finance said in a statement this afternoon.
“The repayment of principal and interest on Government’s debt is expected to account for $1.8 billion, compared to the revised projection of $1.9 billion,” it added.
The Queen Elizabeth Hospital will once again take the biggest piece of the pie with a subvention of $145.5 million – down from the $146.3 million provided in 2017/2018 – and a capital grant of $3.8 million.
The 2018/2019 Estimates project a $22 million increase in expenditure on goods and services to $413.9 million, while provision “to enable the preservation of investment” made in CLICO International Life Insurance Limited has dropped to $17 million from $25 million.
The country’s marketing agency, the Barbados Tourism Marketing Inc will get no more than the $87.7 million it was allocated in the previous Estimates, neither will the Barbados Tourism Product Authority get more than this year’s allocation of $8.6 million.
However, the tourism industry will receive additional funds, with $15 million provided for the redevelopment of Sam Lord’s Castle, down from $45.9 million this financial year.
Of the other key areas of spending, provision for the University of West Indies remains fixed at $71.3 million; the cash-strapped Sanitation Services Authority has once again been allocated $29 million – $26.6 million for current subvention and $2.4 million in capital grant; the Barbados Water Authority, which is currently battling sewage woes on the south coast, will once again be allocated $15 million “to bring to account” projects funded by the Caribbean Development Bank and the Canadian Commercial Corporation; $12.2 million will go to the Barbados Drug Service for the purchase of drugs; $10.8 million has been provided for the Public Smart Energy Programme; and $7 million each has been provided for the CAF Road Rehabilitation Programme and the Inter-American Development Road Rehabilitation programme.
Debate on the Estimates, as well as the highly anticipated Barbados Sustainable Recovery Programme (BSRP), which was also laid in Parliament this morning, is scheduled to take place from February 12 to 16.