Acting Governor of the Central Bank of Barbados, Cleviston Haynes, as he delivered a presentation on the performance of the economy for the first quarter of the 2017-2018 financial year.
Acting Governor of Central Bank speaks on the economy
Acting Governor of the Central Bank of Barbados, Cleviston Haynes, yesterday painted a sobering picture of the Barbados economy and outlined to the full Social Partnership some of what needs to be done to fix the situation.
The Governor’s comments came as he delivered a presentation on the performance of the economy for the first quarter of the 2017-2018 financial year at the Hilton Hotel yesterday morning.
“We face significant challenges. We continue to have low growth; our reserves are not where we would want them to be. The fiscal deficit has to be addressed and in so doing that would help to slow the rate of debt accumulation,” he said.
His comments came as he noted that the challenges facing the country at this time include a very large fiscal imbalance, which he maintained has to be closed. Haynes said while the decision of how to close that gap is up to the Minister, he is adamant that we have to find the financing by which to address it.
During his presentation, he said that it is important to determine how to increase investment in the economy. Haynes made the point as he said the investment ratio has dropped from 20 per cent in the 2000s to 15.5 per cent, which is not sufficient to maintain long-term sustainable growth.
He went on to say that foreign exchange reserves have been up and down, with it reaching $635 million by the end of the June, equating to 9.7 weeks of imports. This, he pointed out, is the a result of the high debt services. Moreover, Haynes stated that 2016-2017 financial year the deficit was estimated at 6.2 per cent, which he admitted is high.
The Acting Governor added that the country has lost a significant amount of revenue from the International Business and Financial Services Sector and that is one of the reasons driving the imposition of taxes to help close the gap as a result of a loss of revenue. To that end, he said it would serve the country well to see an improvement in the contribution from that sector, as it not only impacts revenue, but also affects the international reserves.
Haynes highlighted that another problem facing the country is that a significant amount of taxes are unpaid, and he argued that if a substantial reduction could be made in that figure, it would affect how public policy is framed. He noted that the last tax amnesty collected over $30 million and it is hoped that the current amnesty, which comes to an end in November, will net around $25 million. (JRT)