NO SURPRISE that the Barbadian economy only grew by 0.3 per cent, as reported by the Central Bank, over the last nine months.
When compared to last year where there was an obvious decline, yes it might seem as if there is a turnaround, but really there is no real change in the performance of the overall economy.
So this continues to be an issue, especially when were are witnessing fiscal disincentives towards growth. From the report one would figure that we are primed for growth as a result of lower fuel costs allowing our non-tradeable sectors, that is the service sectors and the import dependent sectors, to really accelerate their performance or improve their performances.
One would figure that we are in area where it is primed for growth, especially since Government has been able to arrest the fiscal deficit to a great degree and the Central Bank has said that Government seeks to improve it performance or to reduce its deficit down to around four per cent of GDP by next fiscal year.
Though that would put the Government back on track, one has to ask if that would be a little too late to reverse a downward trend in confidence.
The only confidence seemingly coming through is from the financial sector which would have taken its cue from the Central Bank in funding Government debt.
So at least Government has some access to capital.
However, the issue of Government debt then is placed back on the table and net public debt would have risen and amortisation, that is the payment on that debt, and interest costs, though lower than before, would have actually grown over the period.
So that still remains a concern to me, but given two issues of treasury notes on one end and debentures on another end, the Government is seeking to, in a way, refinance its debt, that is, lower the cost of public debt going into next year and into the next five to ten years.
The distribution sector, our largest sector, continues to underperform and, of course, given the flat performance of our economy, that should have been expected.
I do, however, applaud the fact that Government has, via the Central Bank, Ministry of Finance and the Treasury, taken very seriously the issue of cash management and I hope that they are able to continue to improve their reputation in the area of cash management and being able to pay on their debts in a very timely manner.
The fact that we missed construction targets and therefore there was a reduction in the sector speaks to the fact that we really need to focus on being able to get those projects, as highlighted in the report, off the ground in order to get some immediate short term growth.
Last but not least, I am quite glad that we have managed to keep our import cover to 14 weeks and that the international reserves have resumed the constant path that we have known them to have been [on] for years. So I am generally impressed with what’s going on and I am glad that we have stabilised somewhat, but we do need the space for growth measures in the near future.
Jeremy Stephen is an economist.