Barbados has applied to the Inter-American Development Bank for a BDS$66 million loan to shore up its finances.
The loan application is in the “preparation” stage and if approved by the bank’s board of directors would “provide the country with balance of payment support”, according to the IDB, in a loan document posted on its website.
However, the bank has expressed concern that Barbados’ fiscal situation has worsened.
The loan document specifically points to:
• a weak tax administration, which was “dispersed across several ministries, Government departments and agencies, including the Customs Department where it said 30 per cent of those paying value added tax filed returns late and only ten per cent of the Customs declarations were “post clearance audited”.
• the absence of an information system for the administration of excise taxes.
• tax exemptions costing the Treasury $500 million every year or 5.6 per cent of GDP, adding that Government was unable to “quantify in detail the revenue loss” for every incentive scheme now in place.
• Government’s approval of transfers to public corporations and agencies “with no economic rationale or efficiency analysis”.
• many of the 169 public agencies relying on the Treasury for operating funds had collectively run up an “aggregate deficit (of) between 1.5 and 2.1 per cent of the nation’s GDP.
• Government procurement rules and information were “biased in favour of financial management and fund control”, but paid scant attention to the monitoring and the evaluation of procurement procedures.
