The position of Barbados’ foreign reserves is looking better and the gap between Government’s borrowing and spending is narrowing.
Prime Minister Freundel Stuart spoke of the improvement – under a 19-month economic stabilisation programme announced last year – when he addressed the 59th annual conference of his Democratic Labour Party (DLP) yesterday at its Belleville, St Michael headquarters.
He told the gathering that this was the news he received last Monday during an update at Government Headquarters with Minister of Finance Chris Sinckler and officials central to the day-to-day administration of the programme and involved in the monitoring of its progress.
“I was pleased to learn that our foreign reserves situation had substantially stabilised, that our fiscal deficit was trending downwards and that it should be at such a level by the end of the financial year as would send a clear signal of Government’s seriousness in confronting this problem,” he said.
Government’s programme requires reducing employment levels in the public service and tightening financial discipline in both central Government and in statutory boards and state-owned enterprises.
On the revenue side, the programme calls for Government to raise additional revenues by the introduction of new tax measures as well as to improve systems of collection in respect of the tax measures already in place.
Stuart did not give specifics of the achievements but said there was consensus that Government’s policies had silenced the local “prophets of doom and gloom” with their forecasting of a decline in the fixed rate of exchange between the Barbados dollar and its United States counterpart.
Stuart’s comments have come against the backdrop of concerns by international rating agencies Standard & Poor’s and Moody’s about the Barbados economy.
In its latest report Moody’s Investors Service downgraded Barbados’ Government bond rating to B3 from Ba3.
Moody’s said it expected a decline in international reserves this year, due to large current account deficits and weaker private sector inflows, adding that Central bank financing of the fiscal deficit would increase pressure on the country’s currency peg to the US dollar.
Stuart listed the fiscal deficit, the debt to gross domestic product ratio and the shortage of opportunities for gainful employment as the main challenges confronting his administration.
“Going forward, my Government is focusing steadfastly on the working down of the debt/GDP ratio through a strategy of economic growth and enhanced efficiency in revenue and expenditure management.
“The era of the Ministry of Finance learning of new expenditure commitments by a department or ministry after the fact will end shortly. Also, the opportunity for accumulation of huge indebtedness to several Government departments without a full picture being available to Government in real time is nearing its end.” (TY)
