Barbados fiscal deficit stymied by increased spending - Chamber of Commerce
The Barbados Chamber of Commerce and Industry (BCCI) says it appears that progress made three years ago in decreasing the fiscal deficit seems to have been stymied by proposed increased spending by the government.
The private-sector body believes this will not allow the country to get to the safer three per cent originally estimated for the 2016/2017 fiscal year.
The BCCI said in a statement that this trend is cause for concern, at a time when Caribbean economies, with a few exceptions, are making significant strides in deficit shrinkage.
The statement was issued two weeks after Finance Minister Chris Sinckler presented the estimates for the next fiscal year to parliament.
Government's total expenditure for the financial year 2015/2016 is expected to be within the vicinity of BDS$4.3 billion with BDS$3.02 billion going toward current expenditure while BDS$1.2 billion represents capital expenditure and amortisation.
"As business people, we look to the government to be the business facilitator, so as to make the environment ripe for investing, or at a minimum provide some stability that ensures operating entities do not make a loss," it said.
"It remains apparent that the government still intends to spend more than it did in the previous year without a corresponding increase in real revenue," the BCCI said.
According to the private-sector group, low- and middle-income earners continue to be heavily taxed without appreciable relief through reductions in land tax and pensions relief. It is therefore expecting that consumer spending power within these classes will be further diminished.
Given this trend, the BCCI maintained that the estimates "suggest an increase in taxation receipts from goods and services by BDS$122 million which, with consumer spending anticipated to be depressed, will be difficult to attain".
The chamber argued that the focus on increases in government revenue through taxation, presents "increased difficulty" to the business community and the wider population.
"This, when taken in light of increased government budgeted expenditure of BDS$41 million over the same period, can easily be challenged on the increased difficulty the population will face," the chamber said.
The body also reiterated its call for decreased taxation and the implementation of measures which spur productivity and sustainable growth, as well as reduce the fiscal deficit.
"The budgeted fiscal deficit of BDS$1.609 billion for 2016/2017 versus BDS$1.7778 billion for the corresponding fiscal period suggests that steps are being taken to lower the deficit, but this reduction in deficit is due mainly to increased taxation," the Chamber said.
"Are these steps therefore sufficient in these times when Barbados is yet to show true growth rates in line with the CARICOM (Caribbean Community) region?" the Chamber asked.
The BCCI noted that while it supports the Minister's position that the private sector must lead efforts to restore economic growth, "this cannot be from the outside as these estimates indicate".
The Chamber called on the government to treat its members as key stakeholders in the quest to improve the investment climate, "as well as ensure equal sharing of the sacrifice required to return Barbados to the two per cent annual growth in GDP (Gross Domestic Product) targeted by the government".