Monday, April 22, 2024

S&P: Statutory boards concern


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It’s not simply a call from outside of Barbados, in this case Wall Street, but internally in Barbados as well.

The urgent economic plea is for something to be done about the state enterprises which are draining the treasury and keeping Barbados’ economy in a state of stagnation.

“There is pretty much a broad consensus from within the Government and the Opposition as well as the stakeholders at large that something needs to be done on the state enterprises,” said Richard Francis, Standard & Poor’s senior analyst for Barbados.

“Admittedly, it is a difficult process because of legal and other issues. But they are devising a plan to take care of the problem, basically.”

Francis, who is scheduled to travel to Barbados in October to see for himself how the country is moving to address its chronic economic problem, told the BARBADOS BUSINESS AUTHORITY in New York that the statutory corporations were causing the Government to suffer financially because of the heavy transfer of funds needed to keep so many of them up and running.

“That’s where a lot of the slippage on the expenditure side of the Government is coming from in the transfer of subsidies,” he said.

Wall Street also feels Barbados needs to focus much of its energy on the “revenue side” of the fiscal equation, meaning increasing the collection of taxes and other forms of revenue. That’s why the creation of the Barbados Revenue Authority (BRA) is being seen as an important step in the right direction.

“A part of the problem last year was not as much on the expenditure side but on the revenue side as Government revenues fell dramatically. So in order to tackle the fiscal situation they need to do something. In fact they are doing something on the revenue side,” Francis insisted.

“What measures they take makes no difference to me. But what’s an efficient and easy tax to implement and to make sure that the Government does get the revenues are what’s important.

“We need to see the implementation and how effective they are,” he added. “They have gotten some advice from the IMF, for example, and that was one of the things they highlighted, the need to do a better job at the collection of revenue. To the extent that they are able to take steps that are effective, then yes, the creation of the Authority was probably a good thing. But we have to wait and see how it actually plays out.”


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