“There is no magic wand”
Barbados came into this budget cycle against a continuing backdrop of one of the highest debt-to-GDP ratios in the region, second only to Jamaica, widening fiscal deficits in the range of 7.4% of GDP or $660 million, tightening foreign reserves and an increasing money supply. Expectations for the Government’s budget remain high.
Is there a strategy to address this deteriorating fiscal situation?
In his budget address, the Right Honourable Christopher Sinckler, Minister of Finance, outlined the principal concerns of our current economic condition as follows:
- “our debt levels are way too high and still climbing”
- “our fiscal deficit is still too large and must be controlled”
- “…our growth levels are being seriously restricted as we cannot find the fiscal space to assist in further unleashing growth”
- “…our social development system is increasingly being compromised as the cost of sustaining it becomes more challenging”
The main objective of the presentation therefore was to reassure Barbadians of Government’s intention to institute necessary and often painful agendas and policies, which they consider to be in the overall best interest of the country. The Minister of Finance emphasised that deep, structural changes are required to stabilise the economy’s condition. The priorities he outlined to achieve this for the 2016 to 2018 planning period were:
- Improve the foreign reserves position through continued disciplined fiscal policy and enhancement measures for higher earnings of foreign exchange.
- Accelerate GDP growth to reach at least 2.5% by the end of 2017.
- Further reduce the fiscal deficit by addressing both expenditures and revenues, so that by 2018, the deficit will be no higher than the rate of growth of the economy.
- Stabilise the national debt by 2018 and thereafter reducing it.
- Preserve access to key social services provided at the highest quality and financed in a sustainable and credible manner.