The latest Central Bank report outlining some improvement in Government’s fiscal position but no growth in the economy has come as no surprise to the international business community who see the current holding pattern as a “period of consolidation”.
On Tuesday, Governor of the Central Bank of Barbados Cleviston Haynes delivered the island’s report card for the first nine months, pointing out that the economy saw some green shoots, evident in rising revenue intake, reduced public debt, steady holding of international reserves, and favourable performance by the tourism industry.
But real economic activity declined by an estimated 0.2 per cent, due mainly to delays in private sector investment projects and a low level public sector capital spending.
The economy score card prompted the spokesman for the international business and financial services community to tell Barbados TODAY that he did not expect any real economic activity so far this year.
Executive Director of the Barbados International Business Association (BIBA) Henderson Holmes said: “We don’t see anything in the report that is surprising to us.
“We did not expect there would be any growth in Barbados.
“The way we see it is that we are in a period of consolidation.”
But welcoming the “arrest in the decline”, Holmes said BIBA is hoping “we continue to do the right thing and we should see growth as a result”.
He said: “Even though we don’t see anything to alarm us in terms of loss in our sector, we don’t see any real growth.
“At least, no need to be alarmed right now.
“We seem to be holding our own, but we need to do more than just holding our own because we have the potential to do much better.”
Responding to questions from reporters on Tuesday, Governor Haynes pointed out that the international business and financial services industry remained important to the island’s economic performance due to the foreign exchange it generates.
He told reporters: “It is a sector we have to be constantly working to grow the business.
“We want to be able to growth the business not solely by the number of companies we are able to attract but by the quality of companies that we do attract, companies which are able to generate significant international activity.
“The greater the profitability the more we are able to benefit form a tax perspective.
“We want entities that have substance being done from Barbados.”
The central bank governor added: “Let us not measure it solely in terms of the number of companies but by the quality of companies we are able to attract, because that is what will mend both the creative jobs and earning jobs and stimulating economic activity more generally.”
Noted regional economist Marla Dukharan also told Barbados TODAY she was not surprised by the report.
Congratulating Government on its progress on the debt restructuring, Dukharan said the reduction in the debt servicing costs as a result of the domestic and external restructuring “cannot be overstated”.
“This measure creates crucial fiscal space and gives the Government some breathing room to implement other important reforms,” she said.
But Dukharan expressed disappointment at the delays in the implementation of the online transactions tax, shared accommodation levy, gambling tax, and the ASYCUDA World Customs software, saying they were “all very unfortunate but probably not too surprising”.
She suggested that Government look to Jamaica, which recently successfully concluded its IMF programme, for guidance.
Dukharan said: “I would like to suggest that perhaps Barbados would benefit from the creation of a Barbados Economic Recovery and Transformation (BERT) Economic Programme Oversight Committee similar to Jamaica’s, which helped to ensure timely implementation of the reform agenda that Jamaica continues to undergo.”
The economist also noted that the rise in unemployment from 9.2 per cent to 10.8 per cent was not surprising “but indeed very unfortunate”.
She declared: “I anticipate as the lower corporate tax regime yields benefits for the private sector, and as inward investment continues to pick up pace, unemployment will be alleviated.
“But this takes time, and in the meantime, proper safeguards are needed to protect the most vulnerable.”