Government is being urged to fast track the reform of State-Owned Enterprises (SOEs) as its International Monetary Fund (IMF)-backed Barbados Economic Recovery and Transformation (BERT) programme faces a series of challenges.
In its latest report, the seven-member BERT Monitoring Committee (MC) identified key risks to the programme meeting the criteria and structural benchmarks set by the IMF under its Extended Fund Facility (EFF).
“The continued severity of the impact of COVID-19, the continuing challenges with supply chain logistics globally, and further increasing oil prices coupled with limited GDP growth opportunities are the principal risks to the programme,” co-chair of the committee Trisha Tannis said in the report for the period ending December 31, 2021, released on Monday.
Tannis, who is chairman of the Barbados Private Sector Association (BPSA), said that as Government spending has increased significantly over the past year due to its response to the triple shocks of the ongoing pandemic and two natural disasters, it is more important now than ever that the expected reforms to the State-Owned Enterprises (SOEs) make progress.
“The financial support to the SOEs continues to rise steadily, [having] reached $416 million for the first three fiscal quarters of 2021/2022, versus $366 million and $392 million in the same period of the prior two years,” Tannis said in the five-page report.
She made reference to the IMF’s December 2021 Staff Report which noted that the majority of SOEs continue to struggle with structurally-weak profitability and high operating costs that give rise to transfer dependence and highlight a need for sustained reform.
“The Committee notes that a financial health dashboard for SOEs was developed under the EFF to provide the GOB [Government of Barbados] with a mechanism to analyse the performance of priority SOEs and further elaborate targeted reform measures to reduce Government dependence.
“The Committee encourages the GOB to ensure that effective use is made of this tool and reforms of these entities are accelerated as a matter of urgency,” Tannis said.
But it was not all negative news coming from the BERT Monitoring Committee.
The Co-Chair reported that Government has continued to achieve all of its performance targets, in particular, the revised primary balance of -1 per cent of Gross Domestic Product (GDP) and the growth in Net International Reserves to levels well above the programme target.
With regards to the quantitative performance criteria required to be met under the EFF compared with the actual results achieved, the report showed that Government had a target not to exceed $420 million in transfers and grants to public institutions, and it only spent $321 million.
As for public debt, the Committee disclosed that while the Government had set a ceiling of $13.7 million, debt only reached $13.3 million.
The least amount of Net International Reserves that Government had intended to maintain for the period ending December 31, 2021, was $1.4 billion; however, according to the BERT report, the reserves soared to $2.6 billion.
When it came to the three indicative targets, the ceiling set for domestic arrears was $60 million, but they were kept at $34 million while the minimum social spending target of $35 million ended up at $45 million.
The maximum indicative target arrears by public institutions of $29 million was actually $25 million during the period under review.
There were two structural benchmarks required to be achieved under the EFF and both were met.
One required the Minister of Finance to issue regulations for a procedural fiscal rule, specifying hierarchical fiscal objectives, accounting basis, monitoring bodies and correction mechanisms. The other one mandated the Customs and Excise Department to improve trade facilitation and risk management.
emmanueljoseph@barbadostoday.bb
