The jury is still out on whether the Barbados Economic Recovery and Transformation (BERT) programme will be enough to stem the tide of economic turmoil, the Caribbean Development Bank’s chief economist told journalists today.
The CDB’s Director of Economics Dr Justin Ram said while it was critical that the Mia Mottley administration stick to its targets, it should also focus on improving the country’s ease of doing business and reduce joblessness among young people.
“Our assessment of the BERT programme, it is still early days, but the progress made thus far is very heartening,” Dr Ram said at the CDB’s annual news conference at the regional development bank’s headquarters at Wildey.
But the CDB official praised as “very good” the Government’s significant reduction in the ratio of debt to gross domestic product from 170 per cent to 127 per cent.
Dr Ram: “There is still some more that has to be done with respect to fiscal consolidation. Again, what would really propel the Barbados economy into a transformation is doing the institutional reforms that will seek to improve the ease of doing business. I cannot reiterate that enough.”
Pointing to the Grenadian and Jamaican experiences, the CDB official said obtaining economic growth was critical.
At the end of last year the Barbados economy shrank by 0.6 per cent.
The CDB chief economist told reporters: “What is critical is that throughout the BERT programme, the Government sticks to the task of these institutional reforms to help drive growth. Those reforms will help to improve the business environment so that investors can feel confident to bring their resources into Barbados and also for local investors to start investing so that we can see more opportunities in terms of employment for those in the society.”
Dr Ram appeared to back the BERT programme as a measure to curb an unsustainable level of debt and chart a path for economic transformation.
Following an agreement with the International Monetary Fund (IMF) last year for a $580 million Extended Fund Facility, Barbados benefited from a $150 million loan from the CDB to support the implementation of the BERT plan to enable fiscal sustainability, reform institutions for economic growth and boost social protection.
The CDB also lent $40 million to upgrade infrastructure at Grantley Adams International Airport.
And more CDB assistance is on the way for the struggling economy, as Government sought ways to address outstanding social issues, according to the bank’s Director of Projects Daniel Best.
Best said: “The Government of Barbados has reached out and we have been in discussions with them to shore up the social protection systems, ensuring that one, there is capacity within government to provide the kind of counseling, psychosocial support to the most vulnerable, but also develop and enhancing an all encompassing social protection system in responding to the BERT programme.
“In doing that we have identified some resources. We have been in discussions with the respective ministries and we look forward to supporting government in that respect.”
In his annual report on the region’s economic health, CDB President Dr Warren Smith said that after experiencing an average growth of 1.8 per cent last year, CDB borrowing member states are expected to grow by about two per cent in 2019, as construction, tourism, gold and oil industries expand.
But the CDB is forecasting zero growth for Barbados this year, following a disappointing -0.6 per cent decline last year, despite modest gains in the main breadwinner, tourism.
Pledging the financial institution’s continued support for the BERT programme, the CDB president said: “We will further support BERT with more policy-based funding over each of the next three years.”
To sustain any gains over the medium-term, Smith said, CDB borrowing member states will need to “step up their efforts to build long-term resilience and tackle the challenges of climate change, wide fiscal deficit and high public debt, as well as high unemployment especially among the youth”.
Last year, the development bank approved projects totaling just over $700 million, and disbursed some $560 million, a 20 per cent increase in lending over 2017.
Describing this as a pleasing performance, Smith said it was an indication of the bank’s efforts to help the region in its development.
One of the pillars of the regional integration movement going back to CARICOM’s predecessor, the Caribbean Free Trade Association (CARIFTA), the CDB marks its 50th anniversary in October.