#BTEditorial – The $5B budget challenge: Balancing growth and debt

Barbados is at a critical juncture. The government’s recently unveiled 2025/2026 Estimates of Revenue and Expenditure detail the most ambitious spending programme in the nation’s history, which presents both opportunities and challenges.

While the projected $5 billion expenditure signals a commitment to investment and development, the accompanying $1 billion revenue shortfall raises concerns about fiscal sustainability and the resulting potential impact on the lives of Barbadians.

The sheer size of the budget is of note. Proposed spending on essential services like healthcare, education, and infrastructure is undoubtedly necessary for national development. The allocations to the Queen Elizabeth Hospital, the University of the West Indies (UWI), and the Ministry of People Empowerment and Elder Affairs, among others, suggest a commitment to strengthening these vital institutions.

However, the devil is in the details. Barbadians will want to know how these funds will be utilised. What specific programmes and initiatives will they support? And, more so, how will the government ensure that these investments translate into tangible improvements in the lives of ordinary Barbadians? The projected revenue shortfall of nearly $1 billion is a major red flag.

While the government anticipates collecting almost $4 billion in revenue, primarily from taxes, the gap between income and expenditure is substantial. This raises questions about the long-term viability of the budget. How will this deficit be addressed? Will it lead to increased borrowing? Or will it necessitate cuts in other areas? Noted UWI economist Professor Antonio Alleyne, in his analysis of the fiscal package, told this media house: “I think it’s overly optimistic, by a long shot, for the government to assume that it will collect that much revenue given the history of revenue collection in Barbados.”

He cautioned that if revenue does not meet expectations, the government will have to make tough decisions about which areas to fund and which may face cutbacks.
But in response on Friday, Minister in the Ministry of Finance Ryan Straughn was adamant: “We have always been conservative in our revenue projections, and I must say that as the economy has grown, Barbados has allowed us to surpass those very conservative revenue projections.”

Though he acknowledged that the global economy faces uncertainty, Straughn said the government’s focus remains on stimulating growth to match revenue expectations.

“The world is moving into a very uncertain phase and, therefore, we have been focused on how do we get more growth out of the economy such that our assumptions for growth and revenue are matched,” he shared.

The minister stressed that this approach allows the government to pay down debt, provide public services, and “still have some flexibility to adjust should something happen”.
Only time will tell.

Of keen interest to Barbadians is the significant increase in debt payments, projected to reach $1.76 billion. A substantial portion of government revenue is now being allocated to servicing debt, limiting the resources available for investment in critical areas. This situation requires a continued comprehensive debt management strategy and a commitment to fiscal prudence.

Another area of concern is the allocation of funds to state-owned entities. While these entities play a crucial role in the economy, they have often been plagued by inefficiencies and mismanagement. Simply increasing funding without addressing these underlying issues is unlikely to yield the desired results. The government should seek to enforce strong measures to ensure that these entities are operating effectively and transparently.

Barbadians have high expectations that the government will offer some relief from the high cost of living and ensure that the fruits of projected strong growth for the year are equally shared across all segments of society.

The government is duty-bound to clearly explain its financial action plan, especially its rationale for spending. Citizens have a right to know how their tax dollars are being used. The public will be expecting answers in the upcoming Estimates debate.

The 2025 budget presents a significant opportunity for Barbados to invest in its future. However, it also carries significant risks. To ensure that this budget translates into real progress for the country, the Mia Mottley administration must prioritise people-centred growth. It must engage in open and honest dialogue with citizens, address concerns about the national debt, and ensure that investments are made wisely to build a brighter future for all.