By Emmanuel Joseph
Senior economic consultant Carlos Forte says growth has to be the centre-piece of the Government’s budget presentation on Tuesday.
The Canada-based Barbadian economist with the Altus Group is also against any new taxes or increases in indirect taxes “which would effectively erode any gains from the recent wages and salary hike”.
“I think the most important thing would be credible initiatives that would result in the economy growing over the course of the next two years sustainably. I probably should put that in context because some may be quick to say the economy grew last year…
“The Central Bank estimated that growth should be around 10 per cent. I don’t think it’s going to be 10 per cent when they have the revisions,” Forte told Barbados TODAY in an interview.
“In any event, any growth over the last two years would have been pretty much putting the economy close to where it was in 2019 before the COVID-19 pandemic. Therefore it is important to have some sustained economic growth in the traditional sectors such as tourism, but also in new and emerging sectors. But of course, the Government has spoken to a number of private sector, public sector investments that were supposed to come on stream before the pandemic. But we have not seen those types of initiatives yet,” stated the senior economist, whose Canadian employers are a leading provider of asset and fund intelligence for commercial real estate.
“I think that is the main plank. The BERT programme is the overarching framework and we can expect that the budget would at least give us an update or indicate what policy the Government has to adopt with respect to some changes to the NIS to make it viable going forward. That is separate and distinct from public sector pension reform which had been re-signalled by the Government as well and spoken to in BERT 2,” Forte said.
He explained that those are two “very” important policy initiatives that have some implications for reducing employee take-home pay.
“For example, their contribution rate for NIS, or if the Government is now going to create a contributory public service pension which I do support, but it is a question of what it would actually look like. The Government had committed under the first IMF programme and also this current programme to reform and rationalise statutory corporations with a view of reducing the transfer of Government subsidies to these entities,” Forte pointed out.
“I would expect the budget would lay out some road map toward achieving that. But I think growth has to be the centre-piece in terms of facilitating growth, catalysing growth, and I do hope that there are no new taxes or increases in existing tax rates,” declared the top economist.
He suggested that if the Government is now able to provide any further temporary relief in the form of selected reductions in taxes such as on fuel, he hopes that at “the very least”, there wouldn’t be additional duties or user fees.
“Even if Government commits to increasing user fees as part of rationalising SOEs as the BERT 2 alludes to, I don’t think that now is the right time for those types of initiatives. I would prefer to see Government make more adjustments to the expenditure side than the revenue side,” Forte suggested.
emmanueljoseph@barbadostoday.bb
