Barbados govt says no IMF programme to turn economy around
The Barbados government Monday said it would not seek assistance from the International Monetary Fund (IMF) to help turn around an ailing economy, insisting that the fiscal programme it has embarked upon is working, despite having laid off thousands of public workers.
“What we have to do is to do the things that would help us achieve the (economic) growth,” Finance and Economic Minister Chris Sinckler told a news conference.
“Based on what we are seeing we know growth will return,” he said, telling reporters that the government was working to achieve the two per cent economic growth as predicted by the Central Bank of Barbados.
Sinckler said that in relation to the discussion pushed by the private sector for the Freundel Stuart government to contemplate a programme with the IMF, “we have said what our position is.
“We are not contemplating any IMF programme at this stage, we do not think it is necessary, we believe that Barbadians can achieve the objectives of the programme that we have set ourselves.
“It is not going to be easy or painless, but I know the alternatives which some people are clamouring for will be far worse than they may suspect,” he told reporters.
“We are measuring the situation and we feel at this stage that (IMF programme) is not required at this stage,” he added.
Last year, the government announced the plan to cut public service jobs in a bid to save BDS$143 million (One BDS dollar = US$0.50 cents). Government said it would also institute a “strict programme of attrition” across the central public service, filling posts only where it is absolutely unavoidable, over the next five years, ending 2018-2019.
On Monday he told reporters that the government was also looking at ways of reducing the burden of taxes on citizens and was exploring the possibility of broadening the tax base.
Gov’t pushing ahead with reforms
No more major lay-offs in order to close the $174 million deficit this financial year was the word coming from the Minister of Finance and Economic Affairs, Christopher Sinckler.
In a press conference held yesterday at Government Headquarters to address the nation of the current performance of the Barbados economy, he said, “No further lay-offs in any dramatic way that you would have seen last December. However, there is a process of reforming statutory entities, we have moved ahead with the proposed merger of the Sports council and the gymnasium ….we have signed off on a merger between the Barbados National Oil company and the National petroleum corporation. We are looking at other agencies but that has to be approved by cabinet but in that exercise it is normal to expect they will be some attrition.”
Sinckler went on to say that there are some short term measures that may be introduced in terms of broadening the tax base while not necessarily introducing new taxes or increasing rates, so that more people are in the system and get more revenue out. Barbados Revenue Authority is already showing tremendous gains and that is how you get to the adjustment going forward.
Last week the Central Bank of Barbados reported that further fiscal consolidation measures are required if the economy is to reach the target by the due date. Dr. Delisle Worrell, Governor of Central Bank of Barbados stated “further revenue enhancement and expenditure adjustment equivalent to 2.0 per cent of GDP will be required in the second half of the fiscal year to bring us to the target”. That second half is the period October 2014, to March 2015 and the amount that is anticipated is $174 million.
Sinckler outlined that in the next six months, the government will focus on a variety of areas such as “continuing to restrain and, where necessary, institute smaller expenditure cuts across ministries and departments to programmes. Forging ahead with the aggressive implementation of our reform of the tax administration system with the build out of the Barbados Revenue Authority and the continued enhancement of the assessment and collection of revenues. To initiate during this financial year and across the next two financial years, the process of reform of our national tax policy with a view to making it more simple, fair, broad based, buoyant, and effective at raising the maximum amount of revenue for government, while increasingly lessening the burden across tax categories.
“To continue our efforts to reform the operations of several State-owned enterprises to ensure that they reduce their dependence on the public purse while still being able to deliver a reasonably acceptable level of goods and services to the general public.”
The Finance Minister believes that with the our target in view, efforts must be re-intensified to return Barbados’ economy to growth. It is not easy but the signs are encouraging. He said, “I have spoken already about the resurgence in foreign direct investment and we must continue to press further along with this. Undergirding this also must be a two-pronged attack from public and private sectors to jump start our construction sector. From what I have been advised I am confident that between now and next year this time new projects across both sectors will begin.
“Some have already started and others will follow. This should give a much needed boost to domestic economic activity and of course employment. For our own part, my colleagues and I are working assiduously to get our works started and I would like to appeal to our local private sector to do the same.”