Cost of living will go up, says Finance Minister

BARBADIANS were told yesterday to brace for an increase in the cost of living and a slowdown in economic growth as Government outlined a number of measures to shore up the economy.

The Minister of Finance and Economic Affairs, Christopher Sinckler, has admitted that his Budgetary measures will see an increase in the cost of living, in addition to a 0.5 per cent contraction in the economy in 2017.

The measures will cause the cost of living to go up, Sinckler said, while wrapping up his presentation.

He said that the measures were set out to achieve two broad objectives: aiming for a balanced budget and lowering Government’s dependence on Central Bank of Barbados financing.

To balance the budget, therefore, the task would be to define a strategic set of measures, which will bring to balance the $422 million deficit announced in the March 2017 Budget estimates, Sinckler said in the House of Assembly.

He said further that based on underlying trends since the Budget estimates, the new deficit could end around $537.6 million or 5.3 per cent of GDP.

According to him, “The measures in total account for an additional $542 million, as a result of increased revenues, expenditure savings and divestment proceeds. Therefore, with the revised deficit of $537.6 million, the new measures will effectively lead to a small fiscal surplus of $4.4 million.”

The Minister remarked further that this balancing of the fiscal accounts will yield a primary surplus of 7.34 per cent or $702.4 million.

In addition, the new financing requirements from the Central Bank of Barbados is likely to be about $87.0 million, representing $640 million less than the projected pre-adjustment deficit financing by the Central Bank.

“It is expected that with the size of the fiscal adjustment to be implemented, there will be some dampening in the rate of economic growth by about half of a percentage point,” Sinckler declared.

He expects that some of this slowdown will be offset by other planned private sector activity, which must now be undertaken with a greater level of urgency.

However, he added, “It is important to note also that this adjustment will impact on the general price level.” (JB)