Last night’s Budgetary proposals saw the Minister of Finance the Hon. Chris Sinckler attempting to strike a delicate balance between the need to address the fiscal and debt challenges facing Barbados and implement measures to stimulate growth while seeking to maintain existing levels of social services.
In his opening remarks, the Minister noted that the principal concerns are the high and climbing debt levels and the fiscal deficit above desired targets and that these issues have restricted Government’s capacity to stimulate growth and to maintain desired levels of social services.
The Minister also firmly addressed recent concerns about the current level of foreign reserves and reiterated Government’s policy for actively managing and monitoring reserves to minimize the risk to the Barbadian economy if they fell below acceptable levels. He also announced measures to shore up the reserves and to boost foreign exchange earnings.
The following priorities were established for the period 2016-2018:
- improving the foreign reserves position;
- accelerating GDP growth to reach at least 2.5% bythe end of 2017;
- further reducing the fiscal deficit by addressingboth expenditures and revenues so that by 2018 the deficit will be no higher than the rate of growth of the economy;
- stabilizing the national debt by 2018 and thereafter reducing it; and
- preserving access to key social services provided at the highest quality and financed in a sustainable manner.
The Minister also announced that the Ministry of Finance will undertake a comprehensive mid-term review of all ministry and department performance against priorities to identify any implementation challenges and the need to reprioritize.
The major initiatives to improve the foreign reserve position include receipt of proceeds from the sale of the Barbados National Terminal Company and the Four Seasons project and Chinese financing for the Sam Lord’s Redevelopment. In addition, US$60m of loan disbursements are due from various multilateral agencies in the next quarter for several infrastructure and social projects.
The Government will also seek additional investment for tourism and other related development projects by amending the Special Development Areas Act to extend its geographic coverage and will establish a Special Committee to investigate and make recommendations for establishing new duty-free zones.
To stimulate new economic growth the Minister announced initiatives to:
- amend the Tourism Development Act to permit eligible property owners in the sector to access concessions for multi-year refurbishment and renovation projects;
- remove the duty requirement for yachts staying in Barbados waters longer than 6 months and replace with an annual license fee of $2,000 per boat;
- establish a reimbursable grant of up to $50,000 to help local companies improve product and service quality to international standards;
- implement new fiscal incentives for local producers which conform to WTO requirements; and
- establish a special fund, capitalized to the tune of $50 million with resources from the Industrial Credit Fund for a blend of grants and soft loans to fund existing small and medium sized businesses and business start-ups.