BUSINESS MONDAY: ECONOMIC VIEWPOINT: Eyes on review ahead of election
IN what will be the last Central Bank of Barbados Economic Review before the May 24 general elections, the assessment tomorrow will produce enough information for both parties to use in their campaign for the elections. The date for the elections was announced last week by the Prime Minister, Freundel Stuart.
It is expected that the economy will be one of the subjects the ruling DLP Government and the BLP opposition along with the other parties, will be locking horns over.
If the economy maintains the two per cent first quarter growth recorded in 2016 and again last year, Government will feel more comfortable that some headway is being made with restoring growth. However, with the decision to put in place the National Social Responsibility Levy (NSRL) to dampen demand it is not likely growth in the first quarter will be two per cent.
Therefore marginal growth of less than one per cent will provide fodder for the Opposition to chomp on in what is expected to be a keenly contested election campaign.
Bank Governor Cleviston Haynes, accompanied by some colleagues, will sit down with the media to outline just how the country’s economy did over the first three months of 2018, and make projections for the remainder of this year.
A year ago to this day the economy had grown two per cent on the back of the Tourism and Construction sectors, a similar growth in the first quarter 2016. Foreign exchange reserves were just over $700 million. The fiscal deficit was trending downwards on account of a continuing fiscal consolidation programme. Measures to control, and eventually reduce Government’s borrowing from the Central Bank of Barbados, and to tackle declining foreign exchange reserves, were also being pursued.
Mr. Haynes will therefore indicate whether the first quarter has shown expansion, if the fiscal deficit of 3.7 per cent of GDP as projected in this year’s Estimates of Revenue and Expenditure, and predicted by Government, has been realised; and if there has been a halt to the falling reserves.
In his review for 2017 the Government said that 2018 will be challenging for the economy. He had also advised that Government must continue to build on the gains made in reducing the fiscal imbalance.
To rebuild reserves, the Governor had looked to three sources: the robust 2017/2018 tourism industry, implementation of planned tourism investment, and divestment of the state-owned assets. However, he did caution that foreign debt repayments and the rising international price of oil “could erode some of the the projected foreign exchange reserve gains.”
Questioned last month about the level of reserves, Finance Minister Christopher Sinckler said he could not get into discussion on that matter since the Governor was preparing to have his news conference on the economy. On that score Sinckler said that some people might not like to what they are going to see when the review comes along.
The good news for the economy going forward is the Barbados Sustainable Recovery Plan (BSRP) which Government said was put together with the support of the local Social Partners.
That plan has outlined new growth targets, keeping unemployment low, aiming for stable prices, the earning of foreign exchange, maintaining an adequate stock reserves and boosting exports. Said Haynes, “...Efforts to improve business facilitation as outlined in the BSRP should provide a framework for strengthening gross prospects.”
The performance of other economic sectors – International Business and Financial Services, Construction, Banking, Agriculture, Wholesale and Retail, and the behaviour of prices and employment, will all be featured in the
More recently, Sinckler accused the Opposition of not having a plan for the economy. The BLP has continued to knock the lower growth recorded as well as the slowing reserves. All of these: the economic review and the lead up to the election will make for a testing election season.