The Minister of Finance and Economic Affairs, the Honourable Christopher Sinckler declared to the country that the home grown economic stabilization and recovery plan which was devised right here in Barbados (the Barbados Programme) is working. The primary objectives of the 19 month adjustment programme were to:
Restore and stabilize the foreign exchange reserves so as to be able to protect our fixed exchange rate;
Reduce the fiscal deficit to sustainable levels; and
Lay the foundation for returning the Barbados economy to a sustainable growth path.
These objectives are consistent with the Medium-Term Fiscal Strategy (“MTFS”) 2010-2014 dated January 2010 the aim of which over the medium term was to:
Reduce the overall fiscal deficit and generate a balanced budget by 2014/15 and a surplus by 2015/16;
Keep economic growth to acceptable levels by focusing on the foreign exchange earning sectors; and
Ensure a reduction in the debt ratios to sustainable levels.
The Minister noted that based on a comprehensive review by the Division of Economic Affairs as at March 31, 2015 as a result of the programme, the Barbados dollar is safe, the fiscal deficit has been cut by nearly half and is well on the way to more sustainable levels, and a tourism-led recovery in the Barbados economy is underway. The Minister also said that the empirical results, which will shortly be reported, will show that not only was the Government able to meet the overall fiscal target but they were also able to turn around a primary deficit of $385 million to a primary surplus of $85 million dollars in one fiscal year.
Regarding Government Revenues the MTFS policy was to:
Improve efficiency of existing revenue collecting agencies;
Carry out a comprehensive review of the existing tax framework;
Return the tax base to its relative size.
As these policies to drive economic growth take effect, it is expected that revenues would benefit from the increased economic activity. From the proposals it appears the Government is projecting revenues of $BD204.7 million from the improved efficiency per the MTFS and for tourism to be the leader of increased economic activity. In addition projected revenues are expected from the Energy sector via the aggressive facilitation of the build-out of an alternative energy sector. However, there appears to be no further commitment at this stage towards International Financial Services, Manufacturing or Agriculture.