In response to the COVID-19 pandemic, the Prime Minister tonight unveiled an “unprecedented” $2 billion economic plan over the next two years to prop up the economy.
The Prime Minister said a $400 million stimulus package for businesses to keep staff on the payroll had never before been seen in Barbados and was designed to “fill the holes in spending in the economy”.
She announced an economic plan would also focus on a public and private capital works programme (PPP), increasing the island’s self-sufficiency, the creation of a Barbados Tourism Fund and $210 million would be spent on families affected by the shutdown.
Mottley said: “Our economy was sticking to the course. [It] provided us with the reserves, provided us with the room, provided us with the credit and enough standing now regionally and internationally for us to launch this most comprehensive integrated programme that the country has ever seen, largely because we have never had this kind of crisis facing us.
“We’ve focused the programme on supporting those who have lost their jobs in the shutdown and to keep those as far as possible who have jobs into their jobs. The economic plan has five parts… and the effect of them is to fill the hole in spending in this economy to the tune of near $2 billion over two years.
“This is the biggest package of spending initiatives ever rolled out over a two-year period on a supplemental basis from what we would otherwise have as our core activities.”
Mottley said it was hoped that businesses would be inclined to keep their staff.
“This is largely new and which I will announce tonight is a series of measures that will inject $215 million one way and a $200 million fund being mobilized on condition that we hold on to as much staff and jobs as possible,” she noted.
Mottley said the private sector was expected to contribute $800 million in investment due to the start of six major projects in the next two years.
Among those expected to resume “in the next week or two” are the $400 million Sam Lord’s Castle project, the Crane and $25 million in improvements to the Apes Hill Golf Course.
Government also touted the $60 million expansion of Sandals at Dover, the $200 million Sagicor Retirement Villages Project as well as the $400 million Hyatt Zero to begin shortly.
But Mottley said the COVID-19 pandemic was projected to cost Government over $400 million in tax revenue.
She said: “We estimate that over the next 12 months, and we have had to revise upwards the numbers that we spoke about three, four weeks ago in Parliament, that we will lose now in the vicinity of $450 million in Government’s tax revenues as a result of the economy being fully, partially shut, or only slowly opening.
“There will be less income tax collected, less corporation tax, less Value Added Tax (VAT), less excise tax, less duties, less fuel and air transport levies. We have spent or committed over $75 million in health related expenditures over the course of the last few weeks on different items.”
The Prime Minister revealed that $40 million had been spent on isolation and quarantine treatment centres, and buying much-needed equipment for the Queen Elizabeth Hospital and polyclinics around the island.
She said that the difference in public revenues and expenditures in this country could worsen by a cumulative $700 million.
But the PM gave the assurance that the island’s foreign reserves were enough to see the island through the crisis.
“Just before COVID-19 struck, our reserves had reached $1.55 billion, the highest level at that time recorded on a like-for-like basis for a while. Today, as a result of the low–interest borrowing from our partner, the Inter-American Development Bank, our reserves today as I speak to you are just over $1.7billion. It is more than enough reserve cover,” Mottley said.
She also announced that Government was “in the middle of an IMF mission this week” and was “moving along in a manner which is satisfactory to us and to them”.