THE CENTRAL BANK is warning that Government and Barbadians have to tighten their belts even more.
With the economy struggling to grow and the fiscal deficit and debt still major worries, Governor Cleviston Haynes yesterday said “we need to strengthen the adjustment effort to reduce the fiscal balance to a sustainable level, facilitate a reduction in the debt to GDP ratio over time, and engender the investor confidence required for promoting acceleration in economic activity over the medium term”.
In other words, Haynes told the media during his 2017 review Press conference, that raising revenue through increased taxation would not suffice, so spending cuts were urgently needed.
Government last introduced austerity measures, including an increase in the controversial National Social Responsibility Levy, in July 2017.
Gains eroded
However, Haynes said even though the fiscal deficit fell by $197 million during the first nine months of last year, these gains were partly eroded by “the result of the granting of exemptions from the incidence of the new taxes on specific goods and services”.
There was also concern that despite repeated calls for fiscal discipline, Government increased its financial support to statutory bodies and other state entities.
“I think everyone agrees that in order to bring the fiscal [deficit] into a long-term sustainable approach, we have to address the expenditure side of Government,” the veteran economist said.
“We have in the short term enacted a number of revenue measures, which though not generating as much revenue as was originally forecast, they are starting to bear some fruit, but if we want to address the fiscal problem sustainably, we have to look at the expenditure side.” (SC)
