Monday 25 March, 2019

No economic growth expected for 2019

Government’s decision to enter into an agreement with the International Monetary Fund (IMF), and the roll-out of the Barbados Economic Recovery Transformation (BERT) programme, was able to stabilize Barbados economic performance in the latter stages of 2018. 

Despite these gains, Governor of the Central Bank of Barbados (CBB), Cleviston Haynes has forecasted that economic growth for 2019 will be flat.  

The outlook was shared during the CBB’s review of Barbados economic performance for 2018 at a press conference on Wednesday. 

During last quarter’s economic review, Haynes had said economic growth for 2019 was forecasted to be in the range of 0.5. to one percent but a falloff in the performance of the tourism sector, namely cruise visitors which dropped by 10 per cent, and a decline in the manufacturing and construction sectors saw a further contraction in economic activity in the last quarter.  

Government was able to make headway in reducing the levels of debt through the domestic debt restructuring programme, erasing approximately $2.9 billion from the stock of debt held by public sector institutions.  

Foreign debt restructuring, the Governor disclosed, is still being negotiated “in good faith” and it is hoped discussions with external creditors will be concluded soon, in light of suspension of debt payments back in June 2018.  

Haynes said an IMF team is expected on island in early May to review Barbados’ economic performance up to the end of March. This IMF review will determine if further monies are disbursed under the Extended Fund Facility (EFF) programme.  

 “There are certain targets we have, fiscal, primary balance, the debt, transfers to enterprises … the next drawdown comes around probably June. It is at that time they will take a report to the board and once we are able to deliver on the targets that we have committed ourselves to deliver on, then it is at that point, we become eligible for the next drawdown.” 

He said government is still in the process of restructuring the state-owned enterprises (SOE’s) in line with the BERT targets. While stressing “it is not all about layoffs”, Governor Haynes said job loss was part of the process of reducing the cost of operating SOE’s.  

A number of budgetary measures which were introduced in June 2018, he explained, did not have a full-year effect but over time, these measures are expected to boost government’s overall revenue. This includes the new legislation governing the gambling sector and taxes on online purchases which will be rolled out in coming months.  

“Based on the combination of measures that have already been put in place, we are looking towards 2019/2020 to see a stronger fiscal position …"  

On a positive note, the country’s stock of international reserves increased significantly following a steady decline over the last two years, to stand at $1.05 billion at the end of December, which is equivalent to approximately 13.5 weeks of import cover.  

“The road remains challenging, we are not yet out of the woods. We are making good process but we have to work together to achieve the objectives. By this time next year we will be in a more comfortable position.” 

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