Barbadians are being told not to expect any substantial economic growth over the next year.
But one of Barbados’ noted economic advisors is positive that the measures being implemented by the Mottley administration would create a solid base for robust economic growth going forward.
Economic Advisor on the Barbados Economic Recovery Team, Professor Avinash Persaud has told Barbados TODAY he was confident Barbados would return to its glory days of more than two per cent growth in coming years once it was able to attract more local and international investment.
Following today’s approval of the Extended Fund Facility for Barbados by the International Monetary Fund (IMF), the economist declared the country was well on its way to seeing a return to growth.
“So we are assuming that next year will be a year really of stability,” said Persaud.
“We will stop contracting, but we don’t expect a lot of growth and the growth will then come, having stabilized the system, and established a platform, reduced the dangers on devaluation, reduce the concerns about Government not meeting its bills, from there we build a platform and we build a platform by being tougher on Government that is much more efficient and has many processes as possible online,” he explained.
The economist said once the Government was able to gain efficiency alone that should help to boost growth tremendously.
“The country is losing about two per cent growth practically for the days wasted in Government offices and we can’t even grow at two per cent and we give two per cent away just like that by having a very inefficient system. Why do you need to go to an office to renew a licence, for example,” he added.
Pointing out that 2018 was “one of the hardest years to forecast”, Persaud said this was due to a number of “forces acting in opposite directions”.
“When you reduce expenditure in the Government and raise taxes you are taking money out of the system,” he explained.
With the restructuring of Government debt, the planned payment of arrears, this should lead to more confidence and ultimately solid investments, Persaud added.
One of the requirements for the IMF’s funding of nearly $600 million (US$290 million) over the next four years is that Barbados meet its fiscal adjustment targets, reform state-owned enterprises and implement structural reforms to support growth as outlined under the homegrown Barbados Economic Recovery and Transformation (BERT) plan.
Defaulting on its debt and putting systems in place to pay arrears including income tax and Value Added returns was critical for Government, Persaud said.
Once those arrears were cleared, the Government is expected to have more spending power, which should also play a significant role in the economic growth, he added.