Stand back Al Barrack & BIPA – The Barbados Private Sector Agency says Gov’t owes them $49 million!

The Barbados Private Sector Association Inc. (BPSA) is expressing concern with respect to the high amounts of government arrears owed to companies in Barbados. According to Mrs. Anne Reid, CEO of the BPSA, “The BPSA is calling on government to give urgent attention to settling its existing arrears to the business community”.

This call from the BPSA comes on the heels of a survey conducted by the organization among a total of 25 companies across several segments of the private sector. Of those surveyed; government owed a total of approximately $49.6 million Barbados Dollars. The sums owed by government were in the form of Value Added Tax (VAT) refunds, Corporation Tax refunds, Diesel Rebates or sums owed for the supply of works, goods and services to the government.

This call from the BPSA comes on the heels of a survey conducted by the organization among a total of 25 companies across several segments of the private sector. Of those surveyed; government owed a total of approximately $49.6 million Barbados Dollars. The sums owed by government were in the form of Value Added Tax (VAT) refunds, Corporation Tax refunds, Diesel Rebates or sums owed for the supply of works, goods and services to the government.

The BPSA survey produced the following results:

  • Government owed a total of $1,066,336 or 2.1% of total arrears in diesel rebates to those surveyed.
  • A total of $13,876,213 or 27.9% of total arrears was owed in VAT refunds to those surveyed.
  • $12,033,147 or 24.2% of total arrears was owed to suppliers of goods to the government.
  • $14,273,928 or 28.7% of total arrears was owed to suppliers of services to the government.
  • $4,502,360 or 9.1% of total arrears was owed to providers of works to the government.
  • $3,983,108 or 8% of total arrears was owed in Corporate Tax refunds to those surveyed.

The survey confirms that these outstanding arrears are impacting negatively on the business operations of a high percentage of the firms surveyed. Approximately 68% of those surveyed indicated that the arrears had a significant impact on their operations. It is also important to note that of this 68%, the impact on firms across all categories, i.e. micro, small, medium and large was significant. In other words, the size of the firm did not appear to have any major bearing on the impact that the outstanding arrears had on their operations. In short:

i. The arrears limited marketing efforts and the pursuit of new business initiatives/investments;
ii. The arrears created cash flow problems which curtailed the ability of some firms to meet their obligations to suppliers, receive credit or meet their obligations to government. In some instances, payments to both local and overseas suppliers are compromised. This situation has a domino effect in that when local suppliers in particular are not paid, they in turn are not able to pay their own suppliers or staff. As a result, the image and reputation of some firms are being jeopardised;
iii. Without the repayments, some firms are facing difficulties in meeting their daily operational expenses;
iv. The outstanding payments, especially the length of time it usually takes for firms to receive payment has created general uncertainty and negatively impacted decision making in areas such as budgeting; and
v. Some firms have hinted that their ability to maintain staffing levels may be compromised if the practice of substantial arrears and lengthy delays in repayments continues.

The BPSA has already communicated the results of its survey to the Government of Barbados through the Ministry of Finance.

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