DEFICIT FOCUS

BARBADIANS will from July this year be called upon to pay a two per cent commission on the sale of foreign exchange as Government looks to clamp down on the demand for foreign exchange.

This is among a suite of measures outlined yesterday by the Minister of Finance and Economic Affairs, Christopher Sinckler, to shore up the island’s dwindling foreign exchange reserves, tackle the deficit which he called public enemy number one, and to reduce Government’s dependence on financing from the Central Bank of Barbados.

The other measures include a proposal to sell the Hilton Hotel, increase the takings from the National Social Responsibility Levy, an increase in the Excise tax on gasoline and diesel, introduction of another Tax Amnesty, and some debt reprofiling.

In a presentation, which lasted three hours and ten minutes, the Minister said that the measures introduced within the Budget set out to achieve two broad objectives: to move as close as possible to a Balanced Budget with a view to reducing the dependence on Central Bank financing and, secondly, to reduce the demand for foreign exchange.

According to Sinckler, the two per cent charge on the sale of foreign exchange will extent “to inter alia, all wire transfers, credit card transactions, and over the counter sale of foreign currencies.

Government anticipates $52.5 million from the increase over the remainder of the current financial year and $140 million over a full year.
However, the biggest revenue-raising measure will be the National Social Responsibility Levy, which will be increased from two per cent to ten per cent. The Minister said that in the process, that tax imposition will realise some $291 million in a full financial year and $218 million for the remaining nine months of the financial year.

Sinckler said that Cabinet has also taken a decision to divest the the Hilton hotel in which the government is a majority shareholder. He revealed that the investment in Sam Lords Castle Resort is estimated to be in the range of BDS$500 million. “With this in mind, government believes that, in keeping with its policy to limit the number of hotel properties it holds, that now would be a good time to divest itself of the Hilton,” according to him.

The hotel is said to be worth just under BDS$200 million. Additionally, if that sale goes through government is expecting a boost to the country’s foreign reserves of $100 million.

He also stated that government had started the process of examining its portfolio of short and longer-term securities instruments to determine where and how any profiling of some of the interest on some of them could be done. Preliminary discussions have taken place between the Central Bank and the National Insurance Scheme and his Ministry expects $70 million in savings. That money would go to liquidate arrears to the NIS.

As for the Tax Amnesty, Sinckler said that figures from the last one indicate that just over $34 million was collected in outstanding taxes and that on this occasion the authorities are anticipating that an additional $25 million can be realised. (JB)