TARGETS HIT . . . BUT CHALLENGES PERSIST, SAYS BERT MONITORING COMMITTEE

Barbados has met all its quantitative performance and indicative targets under the current International Monetary Fund (IMF) programmes, but concerns remain about the country’s global competitiveness and business facilitation environment, a report has said.

This is the fourth report under an IMF-Government of Barbados 36-month arrangement for the current Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) that is intended to maintain and strengthen macroeconomic stability, support the structural reform agenda, and increase resilience to climate change.

Like the 2018-2022 EFF, the current EFF and RSF arrangements include both quantitative and structural benchmarks that are measured and monitored throughout the three-year duration.

In its just-released report, the Barbados Economic Recovery and Transformation (BERT) Plan Monitoring Committee, established to keep tabs on the IMF-backed arrangement, noted that the latest document covers the financial results and structural benchmarks for the six-month period that ended September 30, 2024.

The committee said the economy has continued to record positive performance metrics, and for this period there has been strong real growth in GDP and continued moderation of the rate of inflation.

It revealed: “There was a significant increase in total revenue earned by the GOB in the period under review. Total revenue exceeded the prior year period by $385 million driven primarily by additional collection of tax revenue of $356.6 million. Tax revenue was boosted mainly by collection of corporation and property taxes.”

During this period, spending rose by $141.6 million, attributed to interest rates, capital expenditure and transfers to public institutions, the report said.

“As a result of the extremely strong revenue performance, despite the expenditure increase the primary balance at the end of September was $581.2 million or about four per cent of GDP,” it pointed out.

“Overall,” the committee stressed, “on the fiscal and monetary front, government continues to meet the targets under the arrangements.”

The arrangements include several structural benchmarks and reform measures, all of which have been met.

“In terms of the achievement of the quantitative performance criteria under the new arrangements, there has been continued good progress which augurs well for Barbados’ economy,” the monitors revealed.

While all structural benchmarks were met by the end of September, including the online government services platform, the public sector investment programme platform, and the mandatory use of a unique identifier for customs, the monitoring committee noted the ongoing challenges, particularly in relation to cybersecurity breaches.

As highlighted in the prior report, “elements of the newly announced concessions framework require particular attention to ensure that the anticipated benefits of the regime materialise. Private sector engagement on the announced ceilings in value and timeline for concessions is vital, given the nature and timing of development costs for new projects and the potential impact on the continued viability of projects previously granted concessions that are now being renegotiated”.

The monitoring committee said the need for a stable framework, being applied consistently, for investors considering making the large capital allocation decisions needed for the continued growth and diversification of the economic activity sources the economy requires, cannot be overstated.

The report said that under BERT 2.0 one of the strategic pillars, amongst the first noted, is the objective to implement a programme that “boosts the competitiveness of existing sectors, diversifies the economy, improves the doing-business environment”.

The panel continued: “As the country nears the end of the second phase of the IMF-BERT programme, the private sector remains concerned as to the effectiveness of the efforts to boost the competitiveness of the economy and significantly move the needle on the removal of friction within the business facilitation environment.”

Recent pronouncements regarding the establishment of Business Barbados, an agency designed to enhance the efficiency of business facilitation, need now to progress with earnest, even as the IMF programme winds to a close, added the report.

It said: “The need to rapidly improve our global competitiveness in order to attract the level of both Foreign Direct Investment and the expansion of LDI (local direct investment) that is critical to underpin the economic performance required to service our indebtedness to the IMF and other concessionary funding partners, cannot be underscored enough.”

It is anticipated that the report will be the penultimate BERT Monitoring Committee assessment for BERT 2.0.

emmanueljoseph@barbadostoday.bb