Government appears well on course to meeting first-year targets under the IMF-approved austerity and economic recovery programme, the independent watchdog tasked with overseeing the process has declared.
But the panel of labour and business representatives also signaled its concern that Government’s capital spending levels under BERT – the Barbados Economic Recovery and Transformation Programme – might not be high enough to jumpstart the ailing economy.
And it expressed caution that one target – the high levels of foreign exchange reserves – may not tell the true picture of the state of the economy as the Government’s debt restructuring remains unfinished.
In a report revealed to journalists in the boardroom of the Barbados Workers’ Union (BWU) headquarters, the BERT Monitoring Committee signalled their confidence in the Mia Mottley administration’s capabilities of following the plan to the desired conclusion, bolstered by the fact that all of the fiscal and monetary targets were met in the last quarter.
The panel appeared especially impressed with Central Government’s primary balance targets. The primary balance represents total revenues and grants less all spending but excluding interest.
The co-chair of the committee, BWU General Secretary Senator Toni Moore, said that while revenue collection was in line with the target under the BERT plan, the spending cuts allowed for the primary balance minimum target of $125 million to be exceeded by “a significant margin”, leaving a primary balance $253 million.
The president of the National Union of Public Workers Akanni McDowall told journalists he was especially pleased that this target was exceeded without further job cuts in the public service.
The independent panel suggested the Government’s ambitious goal of a surplus of six percent of GDP by the end of the fiscal year on March 31 is in sight.
But while praising this effort, the BERT Monitoring Committee called for greater oversight on funding and spending at statutory corporations.
Moore said: “The Government of Barbados made a solid start on its requirement of increasing the primary balance to a surplus of six per cent of GDP for 2019/20, with actual results for the first three months of the fiscal year exceeding the interim target by a wide margin mainly as a result of expenditure control.”
But the monitoring committee’s co-chair added that “the excessive level of expenditure and transfers to SOEs [that] are not formally monitored as part of the programme, is an area of significant concern to the committee.
“The Government of Barbados should ensure that expenditures at such SOEs are also effectively monitored.”
Among the areas which concerned the committee was the low levels of capital spending, which it argues would stimulate growth and so increase the Government’s chances of hitting the surplus target.
Moore continued: “The low level of capital expenditure is another primary area of concern given the stimulative effect that such capital expenditure can have on the growth of the economy and the level of quality infrastructure available to support growth in private sector-led investment projects.
“The Government should ensure that planned capital projects are executed, which also have the potential to reduce unemployment, and provide opportunities for some of the recently retrenched public workers, and contribute to continued growth in business confidence.”
The government has also surpassed targets for foreign exchange reserves – the Net International Reserves (NIR) – for the period by $45 million, the commission noted.
But it also pointed out the high reserve levels reflect the suspension of external debt payments and said the committee would wait and see how negotiations on restructuring the Government’s foreign debt will impact those reserves.
Another representative on the BERT Monitoring Committee, President of the Barbados Bankers Association, Donna Wellington said: “It is correct that the debt service from foreign creditors is not included in that figure.
“We await the structure of what the new credit arrangement could be, and it could range from all sort of things when you think about what happened on the domestic side where there were interest-only payments and principal payments stretched over a long period of time.
“We do not know at this time but until such time it does remain a concern and it is an accurate thing to question but it could be quite manageable depending on what the agreement is.” [email protected]