BERT watchdog wary of lockdown impact

The business and labour power blocs that sit on the committee monitoring the Government’s fiscal austerity programme have voiced concerns about the impact of now-extended COVID-19 lockdown and its effect on the economy.

Declaring it is “particularly concerned”, the seven-member watchdog on the Barbados Economic Recovery and Transformation (BERT) that is co-chaired by the head of the Barbados Private Sector Association, Edward Clarke, and Toni Moore, general secretary of the Barbados Workers’ Union (BWU), has issued a report expressing fears over the extended “national pause”.

The committee has predicted the lockdown will hamper the island’s ability to meet BERT’s primary balance performance target for the new fiscal year that begins on April 1.

On Monday, Prime Minister Mia Mottley announced that the National Pause which began on February 3 would be extended by an additional 11 days to end on February 28. She revealed that Barbados was calculated to lose around $150 million during the four-week lockdown.

Spelling out its concerns in a five-page report, the committee highlighted the fact that Barbados had managed to meet all of the targets set out by the International Monetary Fund (IMF) to date and acknowledged that current targets were “achievable”, but noted several risks to the BERT programme.

The report said: “The severity of the impact of COVID-19 and the resultant significant levels of unemployment, coupled with the shrinking of GDP (down 18 per cent according to the latest Central Bank report), continue to be the principal risks to the programme. With the further reduction of the primary balance target to minus 1 per cent, meeting the current targets established for the fiscal year should be achievable.

“However, the Committee is particularly concerned about the ability to meet the primary balance performance target for the upcoming 2021/22 fiscal year in light of the following factors: the second wave currently being experienced locally resulting in the current “national pause” and reduced economic activity; the travel restrictions that have been introduced in the major tourism source markets, particularly the UK and Canada; the expectation that the over performance of corporation tax seen in the current fiscal year is unlikely to be repeated in 2021/22 due to a combination of the EU tax blacklisting inhibiting new business, the reduced profitability anticipated by businesses in 2020 due to the pandemic and a number of large transaction-based tax payments that are unlikely to be repeated; and the additional spending that Government will need to incur in its continued response to the pandemic, including the humanitarian response in light of the continued elevated levels of unemployment and expiration of unemployment benefit periods.”

But the committee praised Government’s ability to roll out a vaccination programme as well as to maintain robust foreign reserves in the midst of the global COVID-19 pandemic.

The report added: “It is encouraging to note the recent initiation of the pandemic vaccination program, and the Committee is hopeful that the Government will continue to be able to access additional vaccines to ensure that as broad a portion of the population as possible may be inoculated.

“It also continues to be comforting that the healthy international reserves position and support from international development organizations have positioned the country to meet the challenges from a strong base.”

As speculation rose that the lockdown was headed to an extension past Wednesday, both the BPSA’s Clarke and the Congress of Trade Unions and Staff Associations (CTUSAB), led by General Secretary Dennis DePeiza have expressed serious concerns about the impact of a prolonged shutdown of businesses and government services.

DePeiza said: “CTUSAB is weary that a prolonged period of unemployment could have a devastating impact on the economy and society. It remains conscious of the implications this holds for the operations of business enterprises, the looming possibility of imminent closures that will directly contribute to the exacerbation of the unemployment situation.

“Further, the Congress questions the capacity of the Government to meet the demands made for financial support by business enterprises, and by workers in varying sectors who have been displaced from work.”

The week before, Clarke said: “Having come out of a long lockdown in 2020 where businesses have undergone serious financial stress – a short lockdown is one thing, but any further extension on the lockdown will have a very detrimental impact on business.

“There is no doubt about it and it’s not just businesses; the wider Barbados and our livelihoods will be affected.

“We need to measure everything carefully and make very informed decisions as to how we wish to proceed as a country.” (RB)