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Barbados Eyes Significantly Lower Fiscal Deficit

Wednesday, February 10, 2010

Barbados’ Minister of Economic Affairs, Empowerment, Innovation, Trade, Industry and Commerce, David Estwick, announced in a meeting with business leaders that the government is to introduce a programme to reign in the state deficit to within 2.1% of the island’s gross domestic product (GDP) to ensure the territory’s future financial vitality.

Explaining the challenges the territory faces due to the impact of the global economic crisis, Estwick disclosed that in 2009 real GDP contracted by 5.3%, and unemployment increased from 8.1% in 2008, to just over 10% in 2009. This decline in the economy led to a widening in the fiscal deficit from 6.4% of GDP in 2008, to 8.4% in 2009.

Against this background, Estwick outlined government's proposals to tackle the deficit: "We have crafted a strategy that provides for the targeted policy intervention necessary to address and moderate the fiscal issues confronting Barbados over the next five years.”

“This will be done through better management of our revenues and expenditures. The programme will address debt management and improving the management of the Public Sector Investment Programme in general.”

This initiative, he said, will seek to, among other things, mitigate the number of unemployed, in part by encouraging entrepeneurialism. According to the minister, the programme will also review the territory's attractiveness to investors with a view to enhancing its appeal.

He explained that the government would continue efforts to ensure Barbados continues to offer a beneficial legal and tax environment, couple with a skilled labour market, to ensure it continues to be an internationally competitive jurisdiction for investors, and supports the economy so that it can sustain a growth rate of 3%, or over.