Challenges
The difficult economic environment continues to strain
Barbados’ fiscal accounts and debt levels. Additionally, the
risk of Barbados’ graduation from grant and concessional
financing sources presents a major challenge in narrowing
the options available to this economy. This risk is increased
given the exposure to external shocks, which would have
a negative impact on tourism receipts and private capital
inflows. Another challenge facing the economy is its relatively
weak external position. One of the main challenges to
Barbados will be to reduce the fiscal deficit and to increase
the level of foreign exchange reserves. There is also a set of
structural issues and challenges confronting the Barbadian
economy, namely in the areas of productivity, competitiveness
and the need to implement measures more expeditiously.
iQ: How does the recently presented package for the new
fiscal year alleviate some of these challenges?
Minister Sinckler: In the recently announced 2013 Financial
Statements and Budgetary Proposals, the Government
of Barbados announced its intent to heighten efforts in
improving business facilitation which leads to improved
competitiveness and productivity. Also highlighted is the
proposed reduction of government expenditure which is
aimed at reducing the fiscal deficit to 3% in the first 19
months. Moreover, the measures mapped out in the Mediumterm Growth and Development Strategy 2013-2020 are being
put into place with the aim of seeing growth of approximately
1% in 2014.
Currently, the IMF plays an important monitoring role,
however, apart from the article IV consultations, it is not
envisaged that the IMF will play any other role.
iQ: What are your thoughts on the credit ratings currently
assigned to Barbados by the international credit ratings
agencies? Do you foresee these ratings coming under any
pressure in the short-to- medium term? If yes, how does the
government plan to mitigate the risk of future downgrades?
Minister Sinckler: Since the start of the global economic and
financial crisis in 2008, the Barbados economy experienced
persistent weak economic performance. The weak economic
outturns eventually led to a reduction in Barbados credit rating
by the international credit rating agencies. Important to note is
that the Government of Barbados at the end of 2010 embarked
on rolling out a medium term fiscal and development strategy,
two documents which sought to stem the economic decline
through a series of policy measures and targets. Due to the
One of the main challenges to
Barbados will be to reduce the
fiscal deficit and to increase the
level of foreign exchange reserves.
iQ: What are the medium to long-term plans to reduce the
fiscal imbalances and the debt burden and do you believe the
IMF will play a part?
Minister Sinckler: Chapter four of the Medium-term Growth
and Development Strategy 2013-2020 outlines a revised
fiscal and debt management strategy framework to achieve
the broad twin objectives of reducing the fiscal deficit
and debt to GDP in a sustainable manner which supports
growth, through adjustment, reform and recovery. The
document identifies the restructuring and reengineering of
government’s expenditure items, tax expenditure, revenue
agencies and systems and innovative sources of financing
as actions that will form the central pillar of a rebranded
medium term fiscal strategy. This new strategy will be
reflected in revised fiscal targets which will be trended on
a new downward trajectory to reach between 2.0 to 2.5%
by 2017/18 and below 2.0% by 2020/21. This fiscal effort
will be supported by a clearly articulated sustainable debt
management strategy which will seek to promote sustainable
growth primarily in the foreign exchange earning sectors
and private sector led PPP arrangements. Government will
continue to seek concessionary type loans and grants, and
technical assistance from development partners.
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protracted nature of the global economic crisis which have
brought with it new realities and challenges, the Government
of Barbados has instituted a series of broad-based adjustment
and reforms via its just concluded Medium Term Growth
and Development strategy (2013‑2020) in an effort to tackle
effectively the fiscal situation whilst stimulating growth and
development. In an effort to mitigate the risk of any future
downgrades, government will aggressively implement Section 4
of the aforementioned strategy.