MINISTER?OF?FINANCE CHRIS?SINCKLER is confident that, despite the prevailing recession, the economy is going in the right direction and Barbados should still record marginal growth this year.
He said Sunday that if this holds true it would effectively mean that the economy would have registered four consecutive quarters of positive economic output. This would contrast with the previous five or six quarters of economic decline that peaked in 2009 at near five per cent when the global economic recession was at its worst.
“What this says to us as a country is that while the recovery is not as robust as we would have like during this year so far, and while we still have some way to go to restore our levels of output to those levels consistent with the pre-crisis period, the sky is not falling on us and the earth has not opened up under our feet.
“Our fiscal consolidation programme is beginning to bear fruit with the year-on-year deficit running at 5.5 per cent, down from 9.6 per cent. Revenues are up and expenditures are coming down.
We expect that trend will continue.
“With a continued vigilant application of expenditure control and efficient revenue collection, the deficit should settle somewhere around or just slightly above the original target for the Medium-Term Fiscal Strategy of 5.6 per cent.
“Equally, national debt levels are also likely to come down over the medium term as we sustain our efforts to bring down Government’s fiscal deficit. This will cut Government’s appetite for borrowing from the domestic private capital markets to support its operations,” the minister said.
Sinckler added that the foreign exchange reserves – which had not benefited this year from a bounce in surplus earnings from tourism receipts, or from an injection of funds borrowed from the international capital markets, as was the case last year – still remained at a reasonably comfortable level at around 18 to 19 weeks of imports and would likely end the year at that level.
“This is in spite of the country having to expend more than $100 million for fuel so far this year than it did for last year,” he added.
The minister said unemployment, which stood at 11.2 per cent a year ago though increasing marginally in the third quarter, was still being constrained by the national policy to hold employment in public and private sectors as the country navigated this tough economic period.
“We are equally confident that the return to growth in numbers of business registrations and licences issued in the international business and financial services subsectors can and will be vastly improved in the near term, as Government continues to expand its treaty network and work assiduously to improve our business facilitation grid.
“The steep fall off in manufacturing output in the previous two years has slowed considerably and is now around 2.5 per cent. As high energy prices abate and the costs of other inputs and our aggressive push into new areas of production – such as alternative energy and new markets – begin to catch pace, positive growth in this sector can be achieved in the short to medium term.
“While agriculture continues to struggle behind unfavourable weather patterns and higher input costs over the last 18 months, a turnaround is likely if prices stabilize, even as Government’s efforts to incentivize and reform the sector continue.”
Sinckler said the objectives over the next six months to a year must be to sustain current and forge new strategies to expand the economy; “stay on course with our programme of debt reduction through fiscal consolidation; protect and, where possible, create new jobs for Barbadians through higher levels of foreign direct and domestic investment; and maintain a strong social safety net to assist those among us who are hurting from the lagging effects of the recession in the best ways we can”.
He warned that there were no quick fixes to either the global or domestic economic situations. (ES)
