IDB wants to help with economic recovery as well
The Inter-American Develompent Bank (IDB) is seemingly keen to help Government reform Barbados’ tax system and increase the efficiency of state-owned enterprises.
While delivering a ministerial statement in the House of Assembly last December, Minister of Finance and Economic Affairs Chris Sinckler announced that his ministry “formally requested technical assistance from the International Monetary Fund Fiscal Affairs Department in two critical areas of government’s operations: tax administration, and fiscal/operational reform in the key statutory entities which rely on central government for large transfers for their operations”.
He said the IMF had accepted the requests and that from January that institution would have started “its examination of the fiscal and operational challenges of some of our key statutory entities”.
“I also anticipate that very shortly the Fund will identify a team of experts to conduct the long overdue comprehensive assessment of the direct and indirect tax systems in Barbados with a view to advising Government on major reforms necessary in both tax policy and administration,” he added.
However, in a recent Caribbean quarterly bulletin, the IDB said it “can assist with tax reform and public enterprise restructuring”.
“The Government of Barbados, alongside the International Monetary Fund, is currently reviewing the public sector through tax reform and improving the efficiency of state-owned enterprises. The IDB has already conducted significant research in the area of tax expenditure, pensions, and public enterprises,” it said.
The IDB also said it was “in the process of preparing its new Country Strategy (2014-2018) for Barbados”.
“The bank’s strategic approach focuses on restoring sustainable economic growth through the transformation of the public and private sector while mitigating the risk of external shocks from commodity price spikes, slow recovery of traditional trading partners, natural disasters, and the slow onset of climate change impacts,” the bank explained.
In terms of the performance of the Barbados economy, the IDB said growth was not expected in 2014, but that “a gradual improvement in growth is expected if the global economy continues to strengthen”.
“The International Monetary Fund has recommended additional tightening measures to prevent downside risks. Barbados needs to attract more foreign direct investment and promote exports to achieve a sustainable external balance.”
“A timely start to the investment projects, planned for 2014-2015, would be important in determining the level of economic activity in the medium term. Also, the simplification of the United Kingdom’s Air Passenger Duty to two – rather than four – bands from April 1, 2015, should generate some growth benefit for the economy given the reduced travel cost for visitors from its main source market.” (SC)