#YearInReview – Slow 2019 for business

2019 proved to be a very slow year for business, no economic growth for Barbados, and continued belt-tightening for everyone.

On the other hand, the harsh economic measures, which went into effect the previous year, resulted in some noticeable improvements in some aspects of Government’s economic position and several upgrades to the country’s credit worthiness.

Government started its financial year with a small deficit of just over $32 million when the Estimates were tabled. The administration said it would spend some $3.181 billion and rake in about $3.148 billion in revenues.

The year that was proved to be one of stabilization for the struggling Barbados economy, as Government continued its fiscal consolidation efforts.

The word on almost everyone’s lips was BERT – the Barbados Economic Recovery and Transformation programme.

While it officially started a year prior – October 1, 2018, to be exact – the International Monetary Fund (IMF)-funded BERT programme, designed to breathe new life into the ailing economy and transform Government agencies, would see the continuation of some harsh measures in 2019.

Some of these measures included the retrenchment of Government workers, merging of some Government agencies, the start of the digitization of some Government processes, as the Mia Mottley-led adminstration pleaded with residents to “stay the course”.

The Government also embarked on the retooling, enfranchising, retraining and empowering phase of the $580 million IMF-backed programme.

It managed to get its third installation of US$50 million under the programme, providing a continued buffer for the foreign reserves.

It was in October that Government also reported that it had reached a deal with external creditors, after putting a freeze on all debt payments a year prior.

This helped to reduce the country’s debt to gross domestic product (GDP) ratio, from approximately 157 per cent to around 130 per cent. Government also managed to reduce the gap in its fiscal deficit.

As a result of the deal reached with local creditors in October 2018, and another agreement with external creditors in 2019, the country would receive several economic ratings improvements from regional and international credit rating agencies.

There were several delays in some measures that were announced in the June 2018 budget, including the Value Added Tax on online purchases and the implementation of the ASYCUDA World software at the Bridgetown Port and Customs Department.

By the middle of September this year, Government had announced that any teething issues associated with ASYCUDA World had been dealt with.

With the upgrade of the system from ASYCUDA ++, there was much outcry from the private sector which complained that it was losing out on business as a result of the delays associated with the system.

The business community also reported a continued negative impact on their operations as a result of tax measures implemented the year prior, including the Garbage and Sewage Contribution (GSC) levy and the fuel tax. The GSC was levied at a rate of 50 per cent of their current water bill, while households, except in special circumstances, were made to pay $1.50 per day.

There were also continued delays in several tourism-related projects, even as Government announced promising plans for development of the southwest coast.

Perhaps the most unexpected news relating to the island’s bread and butter industry was the stand-off between Government and major hotel chain operators Sandals Resorts International (SRI).

Government had refused to grant the Jamaica-based hotelier a guarantee that its original agreement for concessions would be binding regardless of any new Government, and the hotel chain pulled the plug on its US$450 million Beaches project which had started at the old Almond property in St Peter.

“On the whole, it has been a very slow year,” Chairman of the Barbados Private Sector Association (BPSA) Edward Clarke told Barbados TODAY, as he looked back on the year.

“We know that there has been no growth in the economy officially. We continue to see very slow progress on the projects that we are hoping to see materialize in the country, but the economy has been stabilized,” he added.

The Barbados economy is projected to grow between zero and 0.25 per cent in 2019.

However, over the past several months, Government has boasted of stopping the bleeding to the injured economy, while insisting that it was now on a path to recovery.

The Mottley administration has also made it clear that every aspect of the society must carry some of the burden required to stabilize the economy and return it to good health.

Clarke said while 2019 has proven to be a very slow period for the private sector, he was looking forward to a more vibrant 2020, due mainly to the numerous hotel projects that are due to come on stream.

“We expect that these projects will get going and stimulate the activity in the country. So a slow period for business in 2019 and looking forward to a much better 2020,” he concluded.

Households were also said to be feeling the continued impact of the 2018 austerity measures, evident in reported decline in spending.

At the same time, residents and some officials continued to cry out against low interest rates at commercial banks and gravitated more towards the credit union movement.

Commercial banks also dismissed suggestions that it was making it too difficult for small business operators to get funding, pointing out that they were only being responsible in their lending.

Throughout 2019, several ongoing projects were advanced, including a build-out of the renewable energy and electric vehicle sector and small business funding opportunities.

In 2019, there were mounting concerns within segments of the private sector, mainly among travel and tourism officials, about the state of the island’s cleanliness and the worsening crime situation.

To quell concerns relating to slow garbage collection, Government managed to import several new garbage trucks over several months, while giving the assurance that special measures were being put in place to ensure a reduction in the crime figures.

While 2019 could be considered a slow year for business, stabilization of the economy, and a year of continued belt-tightening and some social challenges, one thing is for sure – everyone is hoping for and working towards a more prosperous 2020.
marlonmadden@barbadostoday.bb