Barbados??? economy is on a growth path once again!
This disclosure came today from Minister of Finance and Economic Affairs, Christopher Sinckler, in a Ministerial Statement on the Economy, which was read in the House of Assembly.
Mr. Sinckler said the island???s fiscal consolidation programme had been effective in restoring balance to the foreign exchange market and securing the value of the Barbados dollar.
He continued: ???Our foreign exchange reserves have stabilised, our fiscal deficit is on a downward trajectory and the economic growth is returning. By any objective standard the programme is working.?????However, he warned that ???we now have to stay the course with the fiscal consolidation programme and do what is necessary to protect the gains we have made over the last sixteen months???.
He pointed out that based on information up to the end of last month, the expenditure targets set out in the fiscal consolidation programme had been achieved.??The Finance Minister also disclosed that Government was on track to record savings of $68.5 million from reductions in salaries and wages and $229 million from reductions in transfers and subsidies.
???The expenditure reductions are now projected to generate total savings of $290.8 million, or approximately 3.4 per cent of GDP, over half of the proposed fiscal adjustment. The new revenue measures, [namely the] Consolidation Tax, Municipal Solid Waste Tax and Bank Assets Tax, are now projected to yield $91.2 million or 1.07 per cent of GDP, and a special dividend from the sale of BNTCL another $70 million or 0.82 per cent of GDP. Therefore, the fiscal adjustment measures currently in place are now projected to yield a reduction of $452 million in the deficit or a reduction of 5.3 per cent of GDP???,??? he explained.
He said that given the critical work and special monitoring of both the up-scaled Management Accounting Unit in the Ministry of Finance and the special Oversight Committee on State-Owned Enterprises working with agencies to control their expenditure programmes, he was confident those targets would be met in 2014.
Mr. Sinckler also said that Government had decided to delay the introduction of any major new tax reform measures until the Budget, scheduled for 2015. He reasoned that while the IMF tax study had provided a comprehensive basis for reviewing the island???s tax system, Government was not satisfied that the necessary impact analyses of any proposed adjustments to key growth sectors and vulnerable groups in society had been completed.
???The economy is showing its strongest signs of recovery since 2009, and we want to exercise an abundance of care in introducing new measures that may derail a return to sustainable growth.
???In light of this, and together with the discipline which we intend to place on supplementary budget allocations, we have determined that additional smaller expenditure cuts across the board, and more efficient targeted collection of existing taxes to effect gains of $32.8 million will be sufficient to get us close to our deficit reduction target,??? he stressed.
The Finance Minister also announced a short term amnesty to all taxpayers across all tax categories on the interest and penalty accrued on taxes owed at December 31, 2014, to assist the Barbados Revenue Authority in its tax administration and collection efforts. He said access to this facility would be on the basis that the taxpayer paid their total outstanding principal on or before March 15, 2015.
He added that Government was also extending the existing revenue measures that formed part of the 19-month programme until April 2016. However, he noted, Government would be reviewing the Municipal Solid Waste Tax with a view to determining whether its continued existence in its present form was justified.