As badly-needed funds were about to pour into Barbados with today’s final approval of its economic recovery plan, Minister in the Ministry of Finance Ryan Straughn suggested this afternoon the Government won’t be reaching into the pockets of Barbadians with new taxes, at least not for the foreseeable future.
“The mini budget [in June] would have set the benchmark with respect to new taxation and therefore it is not conceived that at any time for the foreseeable future for there to be any new taxes introduced. Of course we will continue to monitor the performance of revenues,” he told Barbados TODAY.
Barbados was due for an automatic first tranche of $100 million with the International Monetary Fund’s formal approval of $600 million for the Barbados Economic Recovery and Transformation (BERT) plan, which came through from IMF headquarters in Washington this morning.
The approval also unlocks a further $400 million in lending from the Inter-American Development Bank and the Caribbean Development Bank.
The only new tax left to be implemented was the value added tax (VAT) on online transactions which was delayed from being enforce today until December, Straughn told Barbados TODAY.
Straughn did not rule out fresh taxes being imposed on Barbadians as the island seeks to ensure it meets the targets set by the IMF over the next four years.
“With the exception of the online taxation which should be implemented by December, it is certainly not contemplated at this particular point in time that there would be any new taxation that is likely to come on stream,” the minister emphasized.
Some additional changes are coming on how central Government and state enterprises spend taxpayers’ dollars, he added.
Turning his attention to the IMF’s formal backing of the BERT plan, he said the approval demonstrated confidence in Barbados and signalled to all international investors, creditors and others that the plan can be trusted to restore economic growth and transformation over the next four years.
The IMF funding comes just as Barbados stays on the alert for storms and hurricanes that could in one blow set back the country’s development progress by years.
“Of course, [the funding] helps us to provide a buffer in the context of what is happening right now in the middle of the hurricane season. And therefore it is important that we have within the context of the Government or capacity to respond in the event that we are impacted by any of the storms that may pass . . . hoping that we don’t have such an eventuality,” Straughn said.
His other message to the international and regional market was that the Fund’s endorsement of the BERT plan means that Barbados was open to business again.
“What is left now for us is to move on to the other elements of the plan, which is obviously to complete the implementation of the domestic debt restructuring, the external debt restructuring process, continue to the public sector reform process that we started since we came into office . . . to accelerate those over the course of the next 18 months or so, such that the targets we expect to meet under the programme that is supported by the International Monetary Fund, that we are able to meet those targets,” Straughn told Barbados TODAY.
The economist-turned-politician said it was also important going forward for the island to get all the disbursements from the Fund, thus providing a further signal to the market that Barbados was back on a path that was going to lead to debt sustainability of about 60 per cent of gross domestic product (GDP) by 2033 and that the economy was headed to a sound growth path.
It was at this point that the first-time MP and minister said he needed all citizens to help make the programme a success by paying the various fees, citing the garbage and sewage tax as an example.
“I think that throughout this process we would want Barbadians to recognize that the success of the programme is hinged on us being able to maintain the fixed exchange rate. Therefore the measures that we have put in place are designed to ensure that we can continue to achieve that overall objective, while at the same time we are in a position to make sure that the reforms we expect to see, that those reforms are carried through,” added Straughn.
The Government’s Chief Economic Counsellor and lead negotiator with the IMF, Ambassador Clyde Mascoll, declared the IMF approval a victory for the people of Barbados, who had been asked to play their part during these difficult economic times.
“It is not going to be easy going, but it does demonstrate the tenacity of Barbadians; the pride and industry that they have in putting their country first. We have a situation in which the Social Partnership played a very major role in getting us to reach this stage, where upon understanding the issues, they were able to ask their membership to participate in this journey that we are on,” Mascoll said in a Government statement.