The Honourable Mia Amor Mottley, QC, MP, Prime Minister and Minister of Finance, Economic Affairs and Investment, has delivered the much anticipated Government’s mini-Budget on Monday, June 11, 2018.
On June 11, 2018 the Honourable Mia Amor Mottley, QC. MP., delivered the first Phase of the Barbados Economic Recovery and Transformation Plan (BERTP). Essentially the plan is expected to be conducted via a three-phased approach:
The combined effect of Phases 1 to 3 is expected to reduce expenditure and raise revenues by approximately BDS$330 million.
Based on Central Bank of Barbados economic information Barbados has experienced a number of converging issues:
Based on information as at May 31, 2018 the Prime Minister indicated there were Government arrears of BDS$1.8 billion (including BDS$460 million owed to the NIS and BDS$345 million owed by the Barbados Revenue Authority to Barbadians and individual companies). Collectively the long-term debt, arrears and contingent liabilities place the debt to GDP ratio close to 175% of GDP.
In addition to the BERTP, the Prime Minister outlined the request to the International Monetary Fund (“IMF”) for liquidity support to the international reserves and an assessment of the BERTP, and the initiation of discussions with a view to restructure the long-term debt.
With the above plan in effect it is proposed that the debt to GDP ratio will decrease to below 115% at the end of five years and to below 85% by the end of 10 years, should the administration be provided with a continuing mandate.
In summary, the fiscal position is expected to yield BDS$3.2 billion or 32% of GDP, with corresponding recurring expenditure of BDS$3 billion or 29% of GDP. Concomitantly, capital expenditure is estimated at BDS$400 million or 3.9% of GDP, leaving a fiscal deficit of approximately BDS$140 million before the implementation of the debt restructuring plan.
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