The Barbados economy is expected to record double-digit growth of about 14.2 per cent this year, according to the latest Central Bank of Barbados estimates, which puts the growth rate at a modest 1.6 per cent for 2021.
This was reported by the Ministry of Finance in the pre-election Economic and Fiscal Update Report dated January 10, 2022, which is required to be published no later than five working days after nomination day.
According to the document, signed by Minister of Finance, Economic Affairs and Investment Prime Minister Mia Mottley and Director of Finance and Economic Affairs Ian Carrington, government’s revenue and expenditure are to increase by the end of the current fiscal year ending March 31.
Revenue targets now stand at $2.63 billion for fiscal year 2021/2022, due mainly to an expected increase of about $24 million in tax revenue, while it is estimated that expenditure will reach just over $3.13 billion at that time.
It also estimated that Government would require close to half a billion dollars to service existing debt obligations for the October 2021 to March 2022 period of the current fiscal year.
The report pointed to increased tourism performance as the main driver of economic growth, noting that current forecasts anticipated that travel and tourism should lead to arrivals of around 78 per cent of pre-pandemic levels during 2022, and “a return to pre-crisis levels by the 2023 winter season”.
“If the easing of travel restrictions is sustained within our main source markets, the United States and the United Kingdom, this should result in a winter season recovery to match pre-pandemic levels by the 2023/2024 winter tourism season,” it said.
While pointing to expected lower unemployment levels and higher inflation, the report indicated that the forecasts for Barbados hinged on the speed of the global economic recovery, the effective execution of planned medium to large-scale investment projects and collective global ability to manage the COVID-19 pandemic.
“Over the medium-term, Barbados is expected to reach its projected growth once economic expectations materialise, with the island returning to a long-term growth path of around 2 to 2.5 per cent,” it noted.
GDP is expected to expand from the estimated $9.3 billion in 2021 to just over $10.7 billion this year.
The report indicated that agriculture and manufacturing helped in the improvement of the second half economic performance for the year.
“With the surge in global supply chain disruptions, these sectors were the first to augment local demand, thus easing international supply challenges with an increase output in root crops in the case of agriculture and sanitizing products in the manufacturing sector. Together, these sectors contributed to nine per cent of domestic economic output,” said the report.
“The non-traded sectors of the economy also contributed to the recovery in 2021, as demand was boosted by the easing in restrictions and curfews, which allowed for the recovery in the retail trade and services sector,” it added.
In relation to Government’s debt, the Ministry of Finance noted “At March 31, 2022 it is estimated that the public debt stock will be approximately $13.3 billion or 137.3 per cent of GDP.
“External debt is estimated at $4.47 billion, domestic debt at $8.75 billion, external guaranteed debt at $46 million and central government arrears at $34.6 million. It is therefore projected that this will be approximately $430.4 million below the International Monetary Fund (IMF) ceiling on public debt of $13.737 billion,” said the report.
It is projected that about $464.2 million will be required to service existing debt obligations during the October 2021 to March 2022 period, of which $235.9 million is for interest expenses, $201.7 million for amortization and $26.5 million for Sinking Fund contributions.
“This is inclusive of actual expenditure as at November 30, 2021. This is approximately $3.2 million more than what is budgeted for the period and is attributed primarily to increased expenditure on domestic securities from security prepayments and issuances to settle legal claims against the Crown,” said the report.
The 22-page document indicated that total revised debt expenditure for 2021-2022 is estimated at $791.2 million, about $26.8 million less than what was approved.
It said: “The projected decrease in expenditure is primarily attributed to interest rate savings due to lower LIBOR rates and slow disbursements on project loans, some of which benefited from extensions to the terminal disbursement dates and maturity extensions.”