Last night Minister of Finance, the Hon. Christopher Sinckler delivered his long anticipated budget address to the nation. In his opening remarks, the Minister acknowledged that despite some progress in facing down many challenges, including the recent growth in the tourism sector, the state of the economy was not yet where it should be in order to maintain the quality of life and standard of living that Barbadians have come to expect. He noted that immediate actions were therefore needed to maintain the balance between the social fabric of our society and effective fiscal prudence.
In August 2016 the Executive Board of the International Monetary Fund (IMF) concluded its Article IV consultation with Barbados. While welcoming the pickup in economic growth led by the tourism sector and the improvement in the external position, the Directors stressed that continued fiscal adjustment and public sector reforms were necessary to bring public debt down, preserve external sustainability, and improve investor sentiment. They also underscored the need for actions to eliminate impediments to stronger long-term growth and to bolster competitiveness.
The Board stressed that stronger efforts were needed to reform state-owned enterprises through better governance, consideration of user fees and potential divestment and consolidation of public entities, calling for swift action to eliminate government arrears.
Finally it was emphasised that the continued financing of the fiscal deficit by the Central Bank of Barbados (CBB) is inconsistent with maintenance of the exchange rate anchor.
Yesterday’s budget measures sought to address each of these areas and in particular the fiscal deficit, which Minister Sinckler noted was now “public enemy number one”.