Lauding government for achieving the majority of its performance targets under the Barbados Economic and Transformation (BERT) programme, the local independent body established to monitor the progress is warning that the effects of the ongoing COVID-19 pandemic remain a major risk to the programme’s performance.
At the same time, the BERT Monitoring Committee said it was looking forward to continued progress in the review and transformation of state-owned enterprises (SOEs).
In its latest public report, the Committee said that despite the pandemic, the Mia Mottley administration had managed to achieve most of its objectives for the review period ending March 2021.
However, the seven-member committee which is made up of private sector and labour union representatives said it was concerned about Government being able to meet its primary balance performance for the current fiscal year, which runs until March 2022.
“Despite the impact of the COVID-19 pandemic, the Government of Barbados has managed to achieve the majority of its performance targets and, in particular, the primary balance surplus of minus one per cent of gross domestic product (GDP) and the growth in net international reserves to levels well above the program target,” stated the report.
“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. The Committee is particularly concerned about the ability to meet the primary balance performance target of zero per cent for the upcoming 2021/22 fiscal year,” it added.
The Committee said it was especially concerned in light of the quarantine restrictions placed on those travelling from Barbados to major tourism source markets, particularly the UK and Canada.
Additionally, it said: “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.”
The Committee said its concern was also heightened considering 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 continued implementation of the vaccination programme”.
“In addition, the Committee looks forward to seeing the results of the new MAU [Management and Accounting Unit] Dashboard which will be used to publish the financial reporting information of the country’s state-owned enterprises (SOEs).
“We also look forward to further progress being made in the planned review and transformation of the SOEs in order to improve the financial reporting, operating efficiency and service levels across these enterprises,” it said.
According to the report, Government met its fiscal and monetary targets as set out in the quantitative performance criteria under the International Monetary Fund’s (IMF) Extended Fund Facility (EFF).
The Mia Mottley-led administration has also achieved its indicative targets, which included a reduction in central government arrears within the limits established under the BERT programme, maintaining the floor on social spending and a ceiling on public institutions arrears.
“Public institution arrears include purchases of goods and services not settled within applicable contractual grace periods or within 60 days after the due date, together with contributions to the NIS overdue more than 60 days and tax obligations not settled within legislated timeframes. The current level of arrears at $29 million is within the maximum limit of $37 million,” the report stated.
Of the four structural benchmarks under the EFF, Government has managed to fully achieve three for the quarter under review.
The Committee explained that while the target of a large taxpayer unit improvement plan has been implemented, efforts to increase on-time filing of returns for all large taxpayers for all core taxes such as Value Added Tax, Corporate Income Tax and PAYE, were still ongoing.