The local team tasked with monitoring the International Monetary Fund (IMF) backed Barbados Economic Recovery and Transformation (BERT) programme is raising concern that Government will find it increasingly difficult to meet its targets for the coming fiscal year.
The BERT Monitoring Committee made this prediction in its latest report for the period April to June, while adding that Government may need to go back to the IMF to seek further tweaks to some target dates.
“Close monitoring and further collaboration and negotiation with the IMF may be necessary as the uncertainty surrounding the recovery of the tourism sector remains very significant,” the team said.
Lauding Government for achieving its performance targets for the review period, especially the primary balance surplus of one per cent of gross domestic product (GDP) and growth in the international reserves, the committee said this continued to be achieved in spite of the impact of the COVID-19 pandemic.
However, the team, which is made up of representatives from the private sector, labour union and creditors’ group, said it was concerned about some challenges ahead.
“The severity of the impact of COVID-19 and the resultant significant levels of unemployment, coupled with the shrinking of GDP are the principal risks to the programme,” it said.
The monitoring committee also said it was concerned that, even with the lowering of the fiscal surplus target and the supplemental funding expected, it will be “a significant challenge” to meet the targets established for the coming fiscal year.
“The continued elevated levels of unemployment raise concerns regarding social implications that the country may face as the periods of unemployment benefits come to an end. It is critical that the counter-cyclical measures announced so far to mitigate the situation are implemented as a matter of urgency,” it added.
The team also expressed disappointment that several anticipated projects have not proceeded as initially anticipated.
“However, it continues to be comforting to know that the healthy international reserves position, together with the successes achieved in the domestic and external debt restructurings to date, stand the country in a much stronger position to meet these challenges,” the team concluded.
Government has met all of its fiscal and performance targets to the end of June.
However, of the five structural benchmarks that were set to be achieved by the end of June, two of them have been met while the deadlines for three have been changed.
The deadline for Government’s actuarial review of the civil service pension system with a view to reform it has been changed to the end of this month.
A December 2020 deadline has now been set for Government to table a revised public pension law to enhance the sustainability of the public sector pension scheme,
as well as for developing a plan to recapitalise the Central Bank of Barbados and address medium and long-term challenges for the National Insurance Scheme stemming from the debt restructuring.
The relocation of the ASYCUDA World under the control of the Customs and Excise Department and ensuring that real-time access is available to the Barbados Revenue Authority (BRA), Ministry of Finance and Central Bank was met.
Structural benchmark outlined for the BRA office was also met by the end of June.