ICAB concerned about economic situation
THE INSTITUTE OF Chartered Accountants of Barbados (ICAB) is concerned that even with a strong tourism performance and the benefits of very low oil prices, the Barbados economy grew by only 0.5 per cent. Among the factors constraining higher rates of growth are, the ongoing fiscal and debt challenges faced by Government, weak performance of several economic sectors, and declining productivity levels.
“The return of the tourism sector to its 2007performance levels, the opening of new international hotel brands such as Sandals, and policy initiatives such the new Tourism Product Authority to improve the quality of our tourism product are encouraging signs. While it is expected future growth will be led by tourism, there is a risk in excessive dependence on one sector and therefore more needs to be done to boost other sectors, especially those which earn foreign exchange,” commented ICAB executive director, Reginald Farley.
ICAB also expressed grave concern about the island’s worsening productivity problem as indicated by the reported gap between the unit cost of labour and output per worker and it is calling on government, labour, and the private sector, to act with haste before it is too late.
“The gap has steadily widened over the last 20 years and can only have a negative impact on Barbados’ competitiveness. The decline in national productivity even though expressed in terms of output per worker is not limited to workers. It points to failures in management in some public and private enterprises, insufficient use of modern technology, and a pervasive inefficiency across several aspects of our society. ICAB recommends that in addition to the obvious improvements at the workplace, we must also address the loss of a substantial number of hours of production through inefficient road transportation, time loss standing in long lines to do simple transactions that should be done through e-commerce, and the general unpunctuality in the society. We further recommend that this matter be discussed by the Social Partnership and urgent corrective action taken,” said Farley.
“Another risk relates to fluctuation in oil prices. The fall of 42 per cent in the price paid for imported petroleum products resulted in significant savings of foreign exchange and a reduction in the cost of living. Conversely, any rise in the price of oil will have negative effects for Barbados. Aggressive implementation of policies and projects to promote renewable energy must be a priority in order to reduce the vulnerability of Barbados to the fluctuations in oil prices,” said Farley.
Noting that the changes to the tax laws and regulations in North America and Europe had led to a loss of some competitiveness by the Barbados international business sector, Farley noted this was further impetus for the island to improve its ranking in the ease of doing business index. He said ICAB was encouraged by the introduction of online services at the Corporate Registry in 2015 and urged a more aggressive push towards e-government services in critical business facilitation departments if we are to make Barbados more attractive by reducing the time it takes to incorporate companies and other critical corporate activities.
He said ICAB was also concerned that the fiscal deficit remained too high at 6.9 per cent of GDP. Pointing to the increase in transfers to public institutions, Farley said this called into sharp focus the lack of progress in the previously announced reform of state owned enterprises.
“We note from the report that if the planned divestment of the Barbados National Terminal Company Limited is concluded the financial inflow will bring the fiscal deficit in 2015/2016 down to the targeted four per cent of GDP. ICAB repeats its call for further divestment of functions and enterprises which do not necessarily have to be performed by or owned by Government. By way of example it is interesting to note that the divestment of the roadside maintenance of the ABC Highway has resulted in savings to Government as well as an improvement in the general appearance of the roadside.” (PR)