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Barbados economic growth projected to be less than 1 percent in 2014 – Governor Worrell
Bank of Barbados Governor, Delisle Worrell. PHOTO/FP</p>
DeLisle Worrell, the Governor of the Central Bank of Barbados, has said that tourism-related investment will impart some stimulus to the economy this financial year, however, this effect will be largely eroded by the fiscal contraction, and the forecast is for growth of less than 1 percent.
In an opinion article commenting on the current status of the Barbados economy, Worrell said the recent economic performance has been commendable given the unprecedented recession in the markets for the island-nation’s tourism and traded services.
He said the Bank of Barbados protects the value of the local currency by intervening as necessary on the interbank market.
“Up until April 2013, Barbados’ foreign exchange reserves were the equivalent of 19 weeks of imports. By September, reserves had declined to a little over 13 weeks. In response, the Freundel Stuart administration took action to introduce a major budget correction in mid-August.”
According to Worrell, the measures included expenditure cuts equivalent to about 3 percent of gross domestic product (GDP), plus additional taxes of about 2 percent.
Worrell said in December, additional measures, including job cuts in the public sector, were introduced to reinforce the effect of the August adjustments.
“Projections are for a deficit equivalent to 5 percent of GDP for fiscal year 2014/15, when the budget cuts will have full effect. Tourism-related investment will impart some stimulus to the economy in 2014, but this effect will be largely eroded by the fiscal contraction, and the forecast is for growth of less than 1 percent,” he said.
“Fiscal consolidation continues into the medium term, and the ratio of net public sector debt to GDP is expected to peak at about 67 percent of GDP in 2015, and decline thereafter. The ratio of external debt service to earnings of foreign exchange is projected at 8 percent for 2014, and to remain at about 10 percent for the foreseeable future,” he added.
Last month, the Stuart administration announced the plan to cut public service jobs in a bid to save BDS$143 million (US$71.5 million).
