Record budget unveiled as revenue projections fall short

Key budget highlights

• Revenue Sources – The majority of the government’s income is expected to come from taxes on individuals and businesses, supplemented by grants and non-tax sources. In the current financial year ending March 31, the government is set to collect more than $3.57 billion in taxes.

• Spending breakdown – Of the $5 billion in planned spending, $3.59 billion represents current expenditure. 

• Debt payments – The country’s debt payments, including principal and interest, are expected to account for $1.76 billion, up from a revised figure of $1.59 billion in the previous year.

• State-owned entities – Transfers to support state-owned entities and institutions are projected to increase by 4.3 per cent or $45.1 million while spending on goods and services will rise by almost $80 million.

The government is set to embark on its most ambitious spending programme yet, with spending expected to top $5 billion for the first time in the coming financial year, according to the Ministry of Finance. 

The Budget marks a significant milestone in Barbados’ fiscal history, with unprecedented levels of both spending and projected deficits. But the landmark price tag comes with a projected revenue shortfall of nearly $1 billion.

The government expects to collect almost $4 billion in revenue during the coming financial year starting on April 1 while state spending is expected to top the $5 billion mark for the first time.

If last year’s revenue figures are any guide, most of that income will come from taxes on individuals and businesses, with contributions from grant funds and non-tax sources.

Projected revenue for the next 12 months ending March 31 2026 is expected to be $3.98 billion using the accrual basis of accounting. On the cash basis, it is estimated to reach $3.88 billion.

On the spending side, the government expects its spending to top the $5 billion mark for the first time at $5.13 billion on the accrual basis. When converted to the cash basis, that figure comes in at $5.08 billion.

These were among the revelations in a statement issued by the Ministry of Finance, as the Mia Mottley administration prepares to debate the 2025 Appropriation Bill, also referred to as the Estimates of Expenditure and Revenue for the 2025-2026 financial year, starting on Monday.

Of the $5 billion in spending,$3.59 billion represents current expenditure.

The perennial challenge of transfers to support the operations of state-owned entities and institutions is expected to increase by 4.3 per cent or $45.1m in the coming year, while spending on goods and services will increase by almost $80m.

In another disclosure in the statement, the government said the country’s debt payments of principal and interest will account for $1.76 billion compared with a revised figure of $1.59 billion.

Providing an update on the current financial year, which ends on 31 March, the government revealed it would have collected more than $3.57 billion in taxes from individuals and businesses on the island.

The ministry explained that on the cash basis accounting procedure, current revenue for the soon-ending financial year was expected to reach $3.77 billion, of which $200m would have come from grant money and non-tax sources.

At the same time, the government’s total expenses for the current financial year, excluding amortisation of $683.1m, are projected to reach $3.97 billion, of which $3.28 billion are current expenses to keep the government running. This leaves a revised deficit of $251.9m or 1.33 per cent of gross domestic product (GDP).

When it comes to what Barbadians can expect in the coming year from April 1 to March 31 2026, the release outlined a small number of appropriations to departments and institutions which included:

$120.9m to the Queen Elizabeth Hospital

$119.1m to the University of the West Indies with $98.4m for economic costs and $20.7m for tuition fees

$94.6m for the Social Empowerment Agency with $55.9m for the Child Care Board, National Assistance Board, Community Elderly Care Programme and others, while $33.5m for Welfare Department grants

$15.4m for Invest Barbados

$13.0m for the CAF Road Rehabilitation Programme

$11.0m for construction of female dormitories at the Regional Police Training Centre.

(IMC1)