Barbados economy on growth path, says finance minister

BRIDGETOWN, Barbados (CMC) — The Barbados Government says the local economy is on a growth path once more and that the fiscal deficit is now on a “downward trajectory”.

Over the past months, the Freundel Stuart Government has implemented a number of stringent policies including laying off thousands of public servants in a bid to turn around the ailing economy.

Finance Minister Chris Sinckler told legislators that 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.

“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.”

But 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 16 months”.

Sinckler said that based on information up to the end of last month, the expenditure targets set out in the fiscal consolidation programme had been achieved and that the Government was on track to record savings of BDS$68.5 million (BDS$1 = US$0.50 cents) from reductions in salaries and wages and BDS$229 million from reductions in transfers and subsidies.

“The expenditure reductions are now projected to generate total savings of BDS$290.8 million, or approximately 3.4 per cent of GDP (gross domestic prouct), 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 BDS$91.2 million or 1.07 per cent of GDP, and a special dividend from the sale of BNTCL another BDS$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 BDS$452 million in the deficit or a reduction of 5.3 per cent of GDP,” Sinckler said, adding he was also confident that the targets set out by the Government would be met in 2014.

Sinckler added that Government had decided to delay the introduction of any major new tax reform measures until the budget presentation next year.

He said that while a tax study done by the International Monetary Fund (IMF) 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 BDS$32.8 million will be sufficient to get us close to our deficit reduction target,” he said.

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 taxpayers paid their total outstanding principal on or before March 15, 2015.

Sinckler said the Government was also extending the existing revenue measures that formed part of the 19-month programme until April 2016.

However, he noted, the Government would be reviewing the Municipal Solid Waste Tax with a view to determining whether its continued existence in its present form was justified.

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Barbados economy on growth path, says finance minister

Top finance officials grapple with weak growth

WASHINGTON, DC, USA (AP) — World financial leaders yesterday promised “bold and ambitious” action to boost a global recovery that has shown recent disturbing signs of weakness.

That pledge from the International Monetary Fund’s (IMF’s) policy-setting committee comes after a week of stomach-churning swings in the financial markets triggered by growing fears that parts of Europe could be in danger of slipping into another recession.

The 188-nation IMF called increasing economic growth an “utmost priority” and pledged to make the necessary structural changes that would stimulate greater growth.

But finance leaders have made similar promises in the past, only to fall short when trying to follow through.

The commitments came in a closing statement from the IMF’s steering committee at the fall meeting of the IMF and World Bank.

Officials also endorsed the IMF’s efforts to support three West African countries battling the Ebola crisis.

IMF Managing Director Christine Lagarde said at a news conference that the IMF has made US$130 million available to Guinea, Liberia and Sierra Leone, and that the IMF and other international agencies stood ready to do more.

“If more is needed, it will be there,” Lagarde said.

Speaking earlier yesterday to the IMF policy-setting committee, British Chancellor of the Exchequer George Osborne took note of the recent downgrades to global growth forecasts and said there was a need “for further progress by policymakers to deliver a strong and sustainable global recovery”.

Brazil’s Finance Minister Guido Mantega, told the IMF group that the global recovery “continues to create a sense of disillusionment”, and the IMF had demonstrated “an entrenched propensity to overstate prospects” for growth in the world’s largest economies.

The IMF and World Bank meetings were preceded by talks among finance ministers and central bank presidents of the Group of 20 nations, which comprise 85 per cent of the global economy. Those discussions focused on the recent growth slowdown and troubling signs that some countries in Europe could be close to another recession.

In a comment clearly aimed at Germany, US Treasury Secretary Jacob Lew told finance ministers on Friday that European countries with “external surpluses and fiscal flexibility” needed to do more to address weakness in demand that was holding back growth.

Germany, Europe’s largest economy, ran a large trade surplus last year.

Lew also called on China, now the world’s second largest economy, and Japan, number three, to make the necessary policy adjustments to increase their own growth.

A string of weak reports on economic activity in Germany, the largest economy in Europe, jolted financial markets this past week.

US stocks ended their worst week since May 2012, and the market turbulence served as a backdrop for the finance meetings.

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Top finance officials grapple with weak growth

Passing IMF tests creates economic stability - Finance Minister

Saturday, September 27, 2014 | 7:06 AM    

KINGSTON, Jamaica – Finance and Planning Minister, Dr Peter Phillips, says that passing the International Monetary Fund (IMF) tests creates stability in the Jamaican economy.

According to Dr Phillips passing the tests means that Jamaica is meeting its targets in instituting key economic reforms, enabling the country to draw-down on funds to promote growth and employment.

Dr Phillips, who was speaking in an interview with JIS News, acknowledged that there are difficulties, but noted that, “I can tell you if we were not passing these tests, life would be tremendously worse.

He said that before Jamaica successfully negotiated the Extended Fund Facility (EFF) with the IMF financing from external entities and investments were low.

“Since then, we’ve had in excess of a billion US (United States) dollars worth of private investments, we’ve had access to loan funds, we have been able to build up our reserves so that if there is a hurricane or crisis of some other sort, we would be able to deal with it,” Dr Phillips explained.

Jamaica has so far successfully passed all five IMF tests under the four-year EFF with the multilateral agency as part of its Economic Reform Programme.

He said that in excess of 30,000 jobs have been added to the economy in the past year, mostly in the areas of tourism, information and communications technology, and agriculture, which mainly benefitted persons in rural parishes.

He said that efforts are being placed on creating more jobs, especially in other sectors, to benefit more Jamaicans.

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Passing IMF tests creates economic stability - Finance Minister

Caribbean finance delegates attend event examining doing business with China

WASHINGTON D.C., United States, Friday September 12, 2014, CMC – Representatives from Caribbean financial institutions are attending the first China Insights Programme focusing on the economic, financial and cultural reality of China.

The Inter-American Development Bank (IDB) said that the Caribbean delegates are among 11 senior representatives of trade finance and international commerce departments of financial institutions from Latin America and the Caribbean (LAC) attending the event.

The IDB, which is organizing the programme, said it is to help banks from Latin America and the Caribbean improve the commercial and financial ties between their client firms and companies from China.

The China Insights Programme will cover key aspects of the Chinese financial and commercial regulation, including current important trends such as the internationalization of the Renminbi.

“We know that the potential of the Chinese market is huge and yet, still quite unknown to the financial intermediaries of Latin America and the Caribbean,” said Gema Sacristan, Chief of the IDB’s Financial Markets Division.

“For that reason, a deeper knowledge of the Chinese financial system will help reinforce the commercial relations between both sides of the Pacific.”

The programme includes expert panels, networking events for the LAC bankers and their Asian counterparts and visits to the financial authorities, the People’s Bank of China and the China Council for the Promotion of International Trade.

“China is the first stop of the Insights Programme, expected to be replicated in other countries in order to help other banks from the region in their support of the internationalization of companies from Latin America and the Caribbean,” the IDB added.

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Caribbean finance delegates attend event examining doing business with China

Trinidad finance minister presents tax-free TT$64 billion budget

The Minister of Finance and the Economy, Sen. the Hon. Larry Howai reads the Appropriation (Financial Year 2015) Bill, 2014 during the 3rd Sitting of the House of Representatives on Monday 8th September, 2014. (© 2014 Office the Parliament.)

PORT-OF-SPAIN, Trinidad, Tuesday September 9, 2014, CMC – The Trinidad and Tobago government Monday presented a TT$64.4 billion (One TT dollar =US$0.16 cents) budget to Parliament announcing a number of incentives and a tax amnesty for defaulters.

Finance Minister Larry Howai during a presentation lasting just over two hours, said that the budget was based on a price of a barrel of oil at US$80 and a gar price of US$2.75 per mmBtu.

He said the total revenue was estimated at TT$60.35 billion with the non-oil sector accounting for TT$39.12 billion.

He told legislators that the total expenditure net of capital repayments and sinking fund contributions stood at TT$64.664 billion and that the fiscal year, the government envisages a fiscal deficit of 2.3 per cent of Gross Domestic Product (GDP), down from the 3.6 per cent during the last fiscal year.

He said that this year’s fiscal package is “in keeping with our commitment to reduce the deficit by one per cent per year.

“We are making the appropriate capital investments to drive modernization but this is being done in the context of the consolidation of our fiscal situation. We are ensuring that the budget deficit does not undermine monetary stability nor crowd out the private sector,” Howai told legislators.

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He said was offering an amnesty for tax penalties and interest for late filing of returns and late payment of income, corporation and Value-Added Taxes, business levy and environmental levy.

“The amnesty will apply to returns, penalties and interest on outstanding tax liabilities for years of income up to 2013. Accordingly, all individuals and corporations who have outstanding tax returns or outstanding tax liabilities and associated interest charges will have these interest and penalties waived if they comply by March 31,” he said.

Howai said that the measure will require amendments to the Income Tax Act, the Corporation Tax Act and the Value Added Tax Act and will take place with immediate effect and will expire on March 31, 2015.

The Finance Minister said he was also proposing to waive all penalties outstanding or chargeable on the filing by corporations of documents with the Registrar of Companies. The proposed waiver will be applicable until March 31, next year.

The government has also announced plans to introduce a savings bond which will allow small investors and pensioners to purchase bonds in much smaller denominations, including TT$1,000 per bond.

He said purchases of bonds from the Government will be tax deductible up to TT$5,000 per annum for a period of five years.

Howai said that the government intends to expand the social safety net by modifying a number of benefits effective October 1, this year.

These include a TT$300 monthly increase in the disability grant that will cost the state TT$86.8 million and an increase of the public assistance grant of TT$300 that will cost TT$89.3 million annually.

Howai said that the personal allowances for individuals aged 60 and over will be increased from TT$60,000 to TT$72,000 and a new programme will provide financial assistance in an amount of $500 per month for one year only for any child born to under privileged parents during the course of the next fiscal year.

He said the families of deceased security personally will benefit from a new Fund from which could be drawn the sum of one million dollars which will be placed in the estate of a member of the State protective services killed in the line of duty.

He said effective from October 1, 2014, the government proposes to increase the procurement value under the Fair-Share Programme from one million to TT$1.5 million, to further boost the small business sector.

The pension for senior citizens will be increase by TT$500 from October 1 and the government said the monthly pension for retired public officers will be increased by the same amount.

The government says it intends to bring the self-employed into the national insurance system with an amendment to the National Insurance Act.

“This proposal will be effective January 1, 2015 and will impact initially 11,300 self-employed.

To that end any self-employed person in the age group 57 and over at the commencement of coverage in the year 2015 will receive a one-off payment equivalent to three times their contribution.

“Anyone in the age group 50-56 at the commencement of this coverage who contributed fully in each year prior to retirement will be credited with additional contributions to allow them to receive the minimum monthly pension payments,” he added.

Howai said the government also intends to inject TT$12.9 million into the national insurance system to cover the cost of the additional contributions for those self-employed individuals and the subsidization for the payment of contributions by low-income self-employed persons.

The government has also announced that it will increase the minimum wage from the current TT$12.50 per hour to $15.00 per hour, effective January 1, next year and is also offering new incentives to home owners.

Howai said that the government proposes to expand the existing two per cent mortgage programme by increasing qualifying property values from TT$625,000 to TT$850,000 and by increasing the combined monthly income of households from TT$8,000 to TT$10,000 and to supplement that programme by introducing a new five per cent mortgage programme for households with a combined monthly income of greater than TT$10,000 and less than TT$30,000, towards accessing a mortgage greater than TT$850,000 but not exceeding TT$1.2 million.

Howai said he is also proposing to meet the outstanding reimbursements owed since 2005 to registered maxi-taxi owners for their payments of Motor Vehicle taxes and Value Added Tax.

He said he proposes from January next year to exempt motor vehicle tax and VAT on new or used hybrid and electric-powered vehicles not older than two years for a period of five years for private or commercial use.

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Trinidad finance minister presents tax-free TT$64 billion budget

No devaluation threat to the dollar, says Barbados opposition Finance Spokesman

Sunday, June 22, 2014 | 10:09 AM    

BRIDGETOWN, Barbados (CMC) — There is no immediate danger of the currency being pushed below its present value although other economic indicators are sliding, says Clyde Mascoll, the opposition Barbados Labour Party’s (BLP) spokesman on finance.

“In spite of the fact that we were having a fiscal crisis problem, and we continue to have one; in spite of the fact that our economy has not been growing for the last six years; in spite of the fact unemployment has been rising, the one economic indicator in Barbados that was positive for the last six years was the adequacy of the foreign reserves at the Central Bank,” Mascoll said recently.

He added:  “If we can get the fundamentals right and do other things and get the policy prescription right, then we should not even be using the word [devaluation] in Barbados”.  

These comments from Mascoll, came at the same day other economic pundits were pointing to increased difficulty in obtaining foreign exchange from the Central Bank and a continued slide of the economy behind those of the CARICOM region.

Disputing a government minister’s claim that there is no problem for individuals and companies obtaining money for overseas transactions, immediate past president of the Institute of Chartered Accountants of Barbados, David Simpson, claimed that a squeeze on foreign currency access is on.

“I’ve heard some denial from one Cabinet minister this week, but I have experienced it, and one or two of my clients have as well,” Simpson said.

While speculating that the current difficulty in obtaining foreign exchange might be a case of the Central Bank strictly applying an old Barbados policy on release of such funds, Simpson  insisted that the restrictions are now in place regardless of the reason.

“I can tell you it is the case, which suggests there is still some concern in terms of the foreign exchange reserves,” he added.

With no conventional natural resources in significant quantity, Barbados depends on earnings gained through licensing offshore companies, tourism, and a small manufacturing export industry for its foreign currency.

The Central Bank reported that as of March, 2014, the island’s foreign reserves stood at BDS$1.1 billion (Bds $1.00 = US$0.50) that covers 16 weeks of imports.

Also on that day, leading investment banker, Jason Julien, spoke of a need to ring ‘alarm bells’ if there was not economic improvement.

He spoke of the island’s weak economic growth, high debt levels, weak foreign exchange earnings, and its susceptibility to external shocks.

“When we look at the Barbados economy compared to the rest of the region as a whole, the reality is we are lagging behind at this point…The average growth rate expected for Barbados is 0.6 per cent, and when you look at the Caribbean as a whole, it exceeds that,” said Julien.

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No devaluation threat to the dollar, says Barbados opposition Finance Spokesman