Government will have to make further adjustments to the way it handles the COVID-19 pandemic in the economic sphere, Central Bank Governor Cleviston Haynes has suggested.
Stopping short of saying what tweaks might be necessary, Haynes said the marked change in economic fortunes highlighted the country’s “need and ability” to adapt and diversify its economic activity.
Since the pandemic came to the island’s shores a year ago, the Mia Mottley administration has negotiated slight changes to the Barbados Economic Recovery and Transformation (BERT) programme with the International Monetary Fund (IMF).
These included a reduced fiscal target, which is now at minus one per cent of Gross Domestic Product, down from the initial six per cent surplus, and an extension to the deadline for some structural benchmarks under the home-grown programme.
Government has also implemented policies geared towards assisting individuals, households and businesses during the pandemic, some of which have already been extended.
“Our policy responses so far whether through loosening short-term fiscal targets or in providing relief to those disadvantaged by this crisis, demonstrate our willingness to pivot. Further adjustments will be required as we seek to mitigate the impact on households and businesses while preserving jobs,” warned Haynes.
“Execution of Government’s capital works programme will be pivotal in addressing the reduced private sector spending,” he added.
Haynes urged financial institutions to continue to work closely with their clients to ensure they “come through this difficult period and are able to innovate, grow and create jobs and earn or save foreign exchange”.
He was addressing the monthly meeting of the Barbados Association of Insurance and Financial Advisors (BARAIFA), which was held virtually on Friday.
He said that while the pandemic had highlighted the island’s ability to adapt and innovate, it had also amplified the economic vulnerabilities and emphasized the need for greater diversification of economic activity.
He warned that it was time to build on any gains “as we seek to create a sustainable framework over the medium-term”.
“This requires the input of all stakeholders. The structural reforms that we have undertaken in our economic reform programme remain central as they will help to improve efficiency, strengthen institutions, and in some cases, better mobilize resources,” said Haynes.
Haynes said while he ended last year with optimism for a “strong, though partial recovery” for 2021, those prospects quickly waned in the face of the uncertainly created by rising COVID-19 infections locally and internationally, especially in Barbados’ major tourism source markets.
However, he said “the introduction of vaccination programmes globally offers hope that the demand for tourism will enable some revival in the latter half of the year. But to fully take advantage of any green shoots it is equally important that we are able to control the spread of the virus at home”.
“The short-term cost of the current shutdown, therefore, represents a significant investment in promoting economic recovery and sustainable job creation over the near term,” said Haynes.