Government is to spend $109 million in the coming financial year’s national budget to fight the COVID-19 pandemic, said Minister in the Ministry of Finance Ryan Straughn.
In providing a sneak peek into the Estimates of Revenue and Expenditure for the 2021–2022 fiscal year to be laid in Parliament Tuesday, Straughn told Barbados TODAY this sum forms part of projected current spending of $3.1 billion and an overall spending budget of $3.3 billion for the next financial year beginning April 1.
It will be the first time that the Estimates budget will be formally allocated a line item on COVID spending, as the pandemic reached Barbados a month before the start of the current financial year.
Straughn said: “We have been able to identify directly within the context of the budget for this year just about $109 million, specifically related to COVID. But of course, there are some programmes within government where the goods and supplies and services would have been increased. But these are specifically to respond to the COVID issues…and these are our best assumptions, given the experiences we have had now.”
But he cautioned that the budgeted spending on COVID could swell were the country to experience more spikes in coronavirus cases.
“Of course we are hoping that – we are seeing the results – but obviously the spike that we had in January, we hope we don’t have anything like that…that requires a lot of resources to address, he said. “So as long as we don’t have those kinds of things, I am confident that we would be able to contain the expenditure related to that. But of course, the health and wellbeing of Barbadians are clearly paramount.”
Straughn also pointed out that while $109 million will be in direct spending, there is some indirect spending which the budget analysts are looking for through the sub-programmes of the various ministries.
Overall, the finance minister told Barbados TODAY, Government’s estimates will reflect not only the unprecedented circumstances of the pandemic but also the administration’s intent to carry out its capital works programme in a bid to jumpstart the economy.
He said this is being done within a framework that allows Government to be responsive to the social needs, while at the same time trying to balance financing for the public health threat and to keep the economy open for business.
Straughn said: “It has not been an easy exercise because as you would appreciate, the uncertainty around how much longer the pandemic will impact the economy, is clearly unclear at this point in time.
“We have pretty much planned for the worse case…but naturally assuming that vaccinations and other interventions globally [work], we anticipate the second half of the financial year will be better than the first half.”
He said this meant that the months of April to October are forecast to be the toughest part of the financial year, but with an increase in the global administering of COVID-19 vaccines, this should precipitate greater economic activity between October and March next year.
“And we have crafted the Estimates to literally try to respond to those kinds of three realities in terms of navigating the first six months as aggressively as possible with respect to execution and to create enough space domestically to allow the economy to come back,” the minister said.
He expressed delight that the administration was still able to prepare a budget for next year with a primary surplus of 0.3 per cent, even though it is significantly lower than six per cent the Barbados Economic Recovery and Transformation (BERT) programme had initially projected.
This surplus would still allow Government to service its debt even if at a slightly slower pace under its commitment to the International Monetary Fund-financed BERT programme.
He noted that coming out of Government’s discussions with the IMF, World Bank and other multilateral lending agencies, and once the crisis ends, the money it borrowed would be converted into a longer-term arrangement which allows Government to repay without having to be burdened by increased debt service immediately after COVID.
Analysts are now putting the final touches on this year’s budget and having been adversely affected by a second lockdown this year, revenue suffered and the execution of programmes during the last quarter of the current fiscal year was impaired, he said.
“Naturally expenditure has been adjusted with respect to that [fall in revenue],” Straughn said. “So we expect to still to be on target for this financial year based on what we revised. But the reality is that the impact of COVID continues to be very significant on the country.”
Given the realities of the crisis, the Mottley administration has had to make more medium to long-term decisions to put the country on a post-COVID recovery path, he added.
Straughn told Barbados TODAY: “It will essentially be a balanced budget that will go before Parliament for the most part because of the circumstances. We are projecting total revenue of about $2.5 billion which is slightly above what we anticipated would come in this year.
“What you anticipate will happen…we have a situation right now for example where, because of the lockdown in February, you will realize that Customs was only clearing essential items during that period of time. There are currently some items that are still to be released and therefore there is going to be a little backlog of what will spill over in April.”
Straughn contended that the slight rise in projected revenue is contingent on keeping the economy open, returning to a level of normalcy and avoiding another lockdown.
The Minister in the Ministry of Finance said: “The expenditure…we have been able to have a slight increase over this year…$3.1 billion…but a lot of that is COVID-related as you would appreciate. When I said a lot of that, meaning, even though, relatively speaking it is at the same level we anticipated this year for the most part. That’s the current expenditure…total expenditure is actually $3.3 billion, just in line with what we anticipated to have at the end of this year.”
“Our assumptions for expenditure as we have traversed COVID effectively for the first year …because the first case of COVID was in March last year… so we have had a year to pretty much assess what were the demands in terms of the response from Government to COVID.”