BARBADOS IS AMONG four Caribbean Development Bank (CDB) member countries whose fiscal deficit narrowed in 2010. The others are Grenada, Guyana and Jamaica.
According to the CDB’s director of economics Dr Denny Lewis-Bynoe, Barbados’ shortfall is expected to be reduced further as a result of measures announced in last year’s Budget. She was speaking yesterday during a news conference at the CDB to discuss the 2010 performance of the bank and its member countries.
Lewis-Bynoe said the narrowing of the deficit through strong fiscal consolidation measures was consistent with Government’s medium-term fiscal strategy aimed at ensuring debt and fiscal sustainability. She noted that Barbados was nevertheless downgraded by Standard & Poor’s as the deficit and debt remained above sustainable levels, although the outlook was revised from negative to stable. The director said that, with the exception of Barbados, most of the countries in the region were particularly challenged on the fiscal front.
“We have a number of countries in the Eastern Caribbean Currency Union (ECCU) that would very much like to undertake fiscal consolidation but the reality is that this is very difficult in the environment in which economic activity is depressed.
“A lot depends on how quickly the global recovery feeds through into these economies and how much of an adjustment they are prepared to make,” she said.
However, Lewis-Bynoe added that the CDB expected that quite a few countries in the ECCU, including St Vincent and the Grenadines, St Kitts and Nevis and St Lucia “will remain challenged to consolidate their fiscal positions any further than they have so far”.
“With the exception of a few countries, deficits are likely to widen further and debt levels are expected to continue to rise unless greater efforts are made to control expenditure, optimize the composition of public sector investment programmes and improve debt management than are currently envisaged in countries’ fiscal strategies,” she said.
Lewis-Bynoe noted that while several countries are attempting to reduce debt to meet fiscal targets or satisfy borrowing guidelines, the impact of rising prices on expenditure and unavoidable costs associated with hurricane rehabilitation will make fiscal consolidation a challenge. (NB)
