When Minister in the Ministry of Finance Ryan Straughn delivers the Budget Speech today in the House of Assembly, he will be doing so against the backdrop of a growing economy and Government’s improved fiscal performance.
However, the minister, who is an economist, will also be speaking as a cloud of uncertainty linked to United States policies and other global risks hovers over the island’s economic prospects this year.
Straughn has already signalled that there will be no taxes in the Budget, but Barbadians will be listening to find out if any new fees or charges will be imposed in the proposals and the extent to which Government will give consumers an ease.
As outlined by Prime Minister and Minister of Finance Mia Amor Mottley, the last Budget, which was presented on March 18, 2024, was “a conversation with Barbadians about where we have come from, where we are now and where we go next and, of course, how we get there”.
Move forward
“It is a Budget that would secure our Barbados of today and our Barbados for tomorrow,” Mottley said.
“It is time now for to us deliver and for us to move forward to achieve equitable, inclusive and stronger growth that would leave no one behind and that would lift everybody up.”
Recent Budgets have focused on economic growth, increased investment, debt, reform of state-owned enterprises, the cost of living, some tax reform policies and energy.
Today’s Budget could cover all of these issues and more as Government continues economic reform to make the economy more resilient in the face of international challenges and continued threat from climate change.
Government will also have to factor into its Budget the new wages and salaries agreement to be negotiated with representatives of public sector workers, as the current deal expires this year.
Central to this has been the Barbados Economic Recovery and Transformation programme, which the Prime Minister recently said was entering its third iteration.
This comes as Barbados approaches the end of its second consecutive arrangement with the International Monetary Fund.
Policies outlined by Straughn will also be anchored on Government’s budget for the 2025-2026 fiscal year, which starts on April 1.
The projection is for $5.13 billion in expenditure and $3.98 billion in revenue, leaving a more than $1 billion deficit which will be funded by domestic ($678.5 million) and foreign borrowing ($518.4 million).
With higher debt repayments plus interest predicted to account for $1.76 billion of expenditure in 2025-2026, the Ministry of Finance, Economic Affairs and Investment expects to benefit from
a primary surplus of $613.6 million.
Straughn outlined the economic challenges facing Barbados, and the improved economic performance, on November 24 last year when delivering a ministerial statement on Government’s mid-year budget review for the 2024-2025 fiscal year.
He said the report was presented at a time when “the global economic environment continues to face several challenges”.
Resilient
“The lingering effects of the COVID-19 pandemic, geopolitical tensions and the ongoing Russia-Ukraine conflict have resulted in economic uncertainty and price volatility,” the minister noted.
“Despite these challenges, Barbados has remained resilient, continuing its recovery with strong performance in tourism and construction sectors. These sectors have driven economic growth and created employment opportunities for Barbadians.”
He said that Government “remains committed to maintaining fiscal discipline while supporting economic growth and development”.
Straughn said the half-year performance left Government confident “that we are on track to meet our targets, and the Government will continue to work tirelessly to ensure that these targets are met”.
The economy’s strong position was confirmed in January when the Central Bank released its review of 2024.
Governor Dr Kevin Greenidge reported “robust economic growth in 2024, marking three consecutive years of expansion and surpassing the estimated global growth rate”.
“Real [gross domestic product] increased by four per cent, driven by strong performances in business services, tourism, construction, and retail trade sectors,” he said.
Government’s fiscal position also improved in the first three quarters of fiscal year 2024-2025, including an overall surplus of $224.8 million, compared to a deficit of $7.7 million in the previous period.
The Central Bank’s outlook is for the economy to grow by three per cent this year, which “hinges on continued investments by both the public and private sectors, as well as ongoing improvements in productivity and competitiveness”. (SC)
