The Barbados Economic Society (BES) has put its seal of approval on the Prime Minister’s economic report card.
But BES president Shane Lowe has warned Barbadians not to expect any major economic growth next year.
Delivering a ministerial statement in Parliament on Tuesday, Mottley outlined a list of accomplishments of her six-month-old administration, while boasting that foreign reserves had reached their highest level in four years which made the dollar safe from devaluation.
She also reported that the debt-to-Gross Domestic Product ratio had fallen and that Barbados was “punching once again above its weight division”.
Lowe told Barbados TODAY the report “appears to reflect some success in the plethora of initiatives embarked upon since May”.
“The new Government’s first six months in office have been characterized by tough decisions, many of which the country has seen the initial benefits of, some whose benefits will materialize over some time, and others whose potentially negative effects must be appropriately mitigated,” he said.
By the end of 2018, Barbados should register its first year of positive foreign exchange reserve growth since 2012 and, while not likely to affect the cost of Government’s borrowing in the near-term, this year saw the first ratings upgrade by Standard and Poor’s after being temporarily rated in ‘selective default’ during the domestic debt restructuring.
“Further, 2019 will likely not bring substantial tax relief for Barbadians and current baseline projections suggest that the ongoing fiscal consolidation will likely keep economic growth subdued over the coming 12 months,” he said.
“Reforms of the state-owned enterprises and our tax framework should also continue and will likely change the ways we live and do business going forward. However, if the many cited capital projects get off the ground and support the expected uplift in economic activity from the arrival of Ross University in January, 2019 should bring better prospects for the country than those experienced in the last two years,” he added.
In her statement, Mottley did acknowledge that the next 12 months would not be rosy. But she said that by December 2019 “fewer persons in this country will have reasons to complain”.
Lowe acknowledged that the new Government had followed through on many of its targets, which it had set, adding that the speed of implementation was welcomed.
“The quick resolution of the domestic debt restructuring and the IMF’s approval of the BERT programme in much shorter-than-average time are both testament to that and perhaps the most notable achievements thus far,” he said.
But, the economist said, there are still some areas for improvement.
While welcoming the Government’s progress in procuring additional trucks to assist in garbage collection “it cannot come a day sooner as many communities continue to experience fortnightly collections at best”, Lowe said.
He also sees room for improvement in Government’s financial oversight by way of increasing the frequency and timeliness of data releases from the Ministry of Finance, Central Bank of Barbados and Barbados Statistical Service.
At the same time, he acknowledged that the upgrades to Government’s financial reporting and information systems have gone some way in ensuring that the Government remain on track with its BERT programme, and may provide the framework for more timely access to data for the general public to provide their own oversight to the Government’s progress.
“Finally, negotiations with external creditors remain incomplete. Timely completion and an amicable deal which satisfies at least some of each party’s objectives should aid in putting the credit rating on foreign currency debt on an upward trajectory,” he said.
Lowe told Barbados TODAY that the single most significant highlight during the first six months of the current administration was the debt restructuring, which has been the subject of much debate.
He warned that it would require “steadfast adherence” to the targets set under the BERT programme to ensure that both domestic and foreign investor confidence continues to rebound in line with upgrades to the country’s credit ratings.
“While external debt restructuring and funding from the multilateral community have provided a boost to foreign reserves levels, improving our capacity to earn and save foreign exchange will reduce our dependence on foreign capital for reserve accumulation going forward,” he concluded.