Moody’s: No growth
International rating agency Moody’s, disputing last week’s report from the Central Bank of Barbados, says there will be no growth in the economy this year.
In a projection that conflicted with Central Bank Governor Dr DeLisle Worrell’s forecast of 0.3 per cent growth by the end of this year, Moody’s said in a statement: “We expect ongoing challenges in the key industries of tourism and offshore services, as well as austerity measures to weigh on economic activity for the rest of the year; therefore, we project a 1.0 per cent year-over-year contraction in 2014.”
The public sector layoffs that resulted in about 3 000 job cuts “reduced the Government wage bill by around nine per cent relative to the first quarter of the previous fiscal year”, Moody’s explained.
But the agency noted: “However, transfers and subsidies, the largest item on the expenditure side, have declined by only 1.6 per cent, and interest expense has increased by 14 per cent, limiting the overall decrease in fiscal outlays to just 1.3 per cent.
“In our view, this illustrates how difficult it is for the Government to curtail socially sensitive expenditures and control interest costs.
“Although we expect fiscal consolidation to accelerate over the next three quarters, it will remain constrained by revenue underperformance, difficulty reining in transfers and subsidies and rising interest costs.” (GE)