President of the Barbados Chamber of Commerce and Industry (BCCI) Anthony Branker has welcomed the latest Central Bank economic review as “good news”.
However, he says there needs to be continued focus on reform of state-owned entities – including considering going the route of privatisation –, economic diversification and other crucial areas.
“Ultimately, in the long-term, we need . . . a continued focus on trade and economic diversification,” said Branker who noted that there must be collaboration between the private and public sectors.
“The private sector needs to focus its efforts on deploying its capital and resources into foreign exchange earning activities, for example, life sciences and alternative energy. However, the state has to provide an enabling environment to unlock that capital.
“That environment needs enablers that foster ease of doing business, private equity funding, and access to foreign exchange in order to unlock capital for investment, not just investment into local ventures but also investment into overseas/regionally based ventures that are locally owned. This will facilitate long-term foreign earning capacity and scale for our local businesses,” he explained.
In relation to reform and consolidation of state-owned corporations, Branker said this should include privatisation to reduce transfers and improve efficiency, transparency and accountability.
“Fundamentally simplify, modernise and improve the quality and delivery of services to citizens, and in so doing, improve the ease of doing business, efficiency and value for money of services provided by the state,” he added.
In relation to the Central Bank of Barbados’ report that there was 10 per cent growth and an increase in government revenue in 2022, as well as lower unemployment up to the end of September last year, the BCCI head said that was not surprising but, “nonetheless, great news”.
“Given the strong [tourist] arrival numbers despite the global uncertainty, this means that growth and business activity should also be strong in the first quarter of 2023,” he said in a statement on Thursday.
To keep unemployment low, Branker cautioned that steps should be taken “to streamline the labour market participants into areas most in demand by employers”, adding that given the expected pickup in construction, securing skilled construction workers will be a key priority over the next four to five years.
Commenting on the contentious issue of the debt to GDP, which was estimated to have declined to 123.8 per cent at the end of last year, Branker said while this was positive news, it was important to note that it was still above the pre-pandemic level, which was around 117 per cent at the end of 2019.
“The public sector will still need to continue its fiscal consolidation programme and, in particular, continue to focus on the reform of state-owned enterprises. Efforts to privatise some of these state-owned entities should be considered,” he stressed.
While the international reserves have increased to a historical high of just over $2.77 billion last year, the high inflation has seen the weeks of import cover being less than it was in 2020 when the reserves were just over $110 million less.
In his assessment, Branker said: “Given the level of borrowing that has occurred over the last few years, this means that the island is still not earning enough foreign exchange to cover its import needs. We are living on borrowed reserves.”
“While private sector credit grew for the first time in three years, the ratio of private sector credit to GDP fell relative to last year. This suggests that credit for business activity and long-term household projects is still slow. When this ratio picks up, we would see even greater growth in economic activity,” he added. (MM)
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