The Barbados Private Sector Association, (BPSA) being cognizant of the economic and social challenges particularly following the devasting impact of the 2020 pandemic, recognizes the effort of the Barbados Government to introduce measures and strategies for the benefit of individuals, businesses, and the nation as a whole. That there is some austerity in some of the measures, is no surprise, however, there are areas which will require clarity and further elucidation to make a more reasonable assessment of their likely impact.
As in past years, BPSA, and by extension the various sectors, was given the opportunity to submit recommendations to the government in anticipation of the budget proposals and financial statement. These recommendations were made within the context of the need to regenerate the sectors generally and to support economic recovery and growth for the country in a post COVID 19 context. The private sector is pleased with the agreement and acceptance of some of our proposed measures, including the relief to the agricultural sector with the reduction in the water rate for farmers and the ease in cash flow challenges for some operators in the hotel and tourism sector. While we await more details on some of the measures announced, the strategic focus on advancing the renewable energy sector, particularly the inclusion of households, is lauded by the private sector as any further attempt to mitigate the rising cost of fuel is welcomed.
The measures to assist with the cost of living are acknowledged and these will be beneficial for all. The BPSA supports the continued effort to protect the most vulnerable in our society whilst taking into account the need to support the youth and their development. The support granted for digitization in the small business sector is another accepted recommendation submitted by the private sector and demonstrates the government’s acknowledgment of the need for broadened wealth creation in the economy.
This measure, together with the reduction in the price of fuel to consumers, we hope would have a positive direct impact not only on the cost of living but on the disposable income of households so as to positively impact their spending power. Any gains will redound to the benefit of promoting growth in the economy.
The BPSA notes Government’s reiteration of its intent to reform SOEs and we await more details on the timelines for the anticipated reform. We believe that control of expenditure, along with tax collection efficiency, could release tangible benefits to Government’s overall financial position. We view this reform as urgent and critical to discontinue the transfer dependence of the targeted entities and to stem the fiscal leakage. We urge the government to adopt the guidance given by the IMF in the formulation of financial health targets and dashboards and rigorous attention to improve governance and reporting.
That the government continues to maintain stability in the managing of our foreign reserves is duly noted. The 15% levy for businesses in financial services and fuel distribution on their corporate tax returns is also noted. However, given the impending proposed 15% global tax rate, it is unclear at this time what is the impact, if any, of the proposed levy on those companies who will also have to pay the 15% global tax. We remind the country that the financial services sector bore the brunt of the debt restructuring of the economy in 2018/2019. We however express concern on the retroactive nature of the tax which is not in keeping with the principles of certainty, transparency and stability.
As it relates to legislation and regulation, we are heartened at the announcement that the fintech sector as one of strategic interest however we encourage the urgent formulation of related regulations, use of regulatory sandboxes and legislation in order for these non-traditional enterprises to domicile as properly established enterprises. We also repeat the request for the legislative amendments submitted for the Amended Tourism Development Act be given consideration to allow all tourism services to benefit from the concessions contemplated in the TDAA.
The private sector welcomes the proposed engagement within the social partnership as mentioned by the Prime Minister. These discussions will provide not only clarity on the implementation of some of the measures but also will provide the anticipated forum to discuss the national debt especially in light of the end of the present arrangement with the IMF.
Generally, however, it can be said the budget is evenly poised to protect the social safety net whilst incentivizing key strategic areas of growth for the government, whilst buffering the current and anticipated increase in the cost of living. The reduction of the cost of doing business in both the public and private sectors remain areas of urgent concern for the BPSA.