Business
Reducing fiscal deficit major challenge facing Barbados economy – Prime Minister Stuart
Stuart acknowledged that government debt had risen “sharply both in absolute terms and as a percentage of GDP (gross domestic product), but that his administration had been able to hold other expenditure reasonably stable over the last five years, and had tried as far as possible to restrict increase in expenditure to debt service costs.
“The government is conscious of the negative impacts on the economy that are induced by a high debt to GDP ratio. Barbados’ debt to GDP ratio has been trending upwards over the last 35 years.
“The fracture in the global financial architecture occurred at a most inopportune time, when several small developing economies in the sub-region had commenced the process of fiscal consolidation. There can be no doubt that fiscal consolidation in small economies such as Barbados is best undertaken during a period of sustained buoyancy in the global economy,” he said.
Prime Minister Stuart stressed that as a result of the size of government all concerned needed to exercise great care to craft a fiscal consolidation strategy that did not inflict injury on “businesses, the economy and the quality of life of our people”.
The national consultation was designed to produce a framework for a united and effective response to the serious challenges facing the country, and involved senior officials from both the public and private sectors.
In April, the Barbados Central Bank announced that the local economy had contracted by 0.4 percent in the first three months of 2013 and urged the authorities to put “back on track” the fiscal consolidation strategy as well as a new medium term adjustment strategy to turn around the country’s economic fortunes.
In its review of the Barbados economic performance for the first quarter of this year, the Central Bank said that on current trends there may be no real increase in the contribution to gross domestic product (GDP) from the tourism or international business sectors in 2013.
