TELL Government where to cut its spending!
That’s the appeal from a Government official to some of the local economists and other commentators as they discuss the latest downgrade of Barbados by Moody’s.
Declining to be drawn into any discussion on Moody’s latest say on the economy, the official said that people continue to call for Government to cut expenditure without getting into specifics.
“They want Government to cut here, there and everywhere without identifying what to cut,” said the official. “They do not want to identify specifics because it suits their purpose to behave that way,” according to him.
Over the weekend Moody’s Investment Services downgraded Barbados Government bond rating to Caa1 from Ba3. At the same time, Moody’s revised the country’s outlook to stable from negative. Areas which were cited as reasons for the downgrade included the slow pace of fiscal consolidation, rising debt levels, and the declining foreign exchange reserves.
The US rating agency said that “the recent and anticipated fiscal consolidation is unlikely to be sufficient to put the debt trajectory on a downward path”. Moody’s is also forecasting an economic growth rate of 1.5 per cent, which is somewhat higher than those which the Central Bank of Barbados and the Caribbean Development Bank (CDB) have projected.
However, Business Monday was informed that it appeared that some wanted Government to push for a balanced budget by way of shedding more labour and closing down or selling off state agencies. “Were Government to do that, it would mean devastating the country,” said another source.
Last month, Government passed in Parliament a new revenue and expenditure programme that became effective from the start of the new financial year on April 1.
Government had set itself a fiscal deficit target of about four per cent of gross domestic product by the end of last month. That figure is expected to come in around 4.2 per cent, compared to the 6.9 per cent at the end of the fiscal year 2014/2015, and 11.0 per cent at 2013/2014.