Governor of the Central Bank Cleviston Haynes reviewed the Barbados economy for the period January to September 2022 with growth recorded at 9.8%. Of concern is the low take up of BOSS bonds, out of 200 million BOSS bonds offered only 10 million was subscribed.
Review of Babados’ Economy – January-September 2022.pdf (1.49 MB)
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9.8% growth
Tourism rebound continues but Governor cautious about next year
BARBADOS’ ECONOMY has grown for the sixth consecutive quarter, but Central Bank Governor Cleviston Haynes is wary of the predicted global slowdown and other risks now on the horizon.
The fluctuating value of the British pound, and its potential negative effect on visitors from the United Kingdom (UK), is also something Haynes and the Central Bank are keeping their eyes on.
The Governor reported yesterday during his third quarter press conference at the Frank Collymore Hall that the economy grew by 9.8 per cent between July and September, and an overall 10.1 per cent for the first nine months of the year.
He attributed the increased
economic output to tourism activity and its spillover into the non-traded sectors and manufacturing sector.
“The Barbados economy continues to recover, as reflected in the doubledigit growth achieved for the first nine months of 2022. During the third quarter, the resurgent tourism sector helped to catalyse economic activity and restore employment levels,” he said.
“The economy is not yet producing at pre-pandemic levels but, based on encouraging forward bookings, tourism is expected to sustain its rebound for the remainder of the year.”
At the end of September, Barbados’ tourist arrivals totalled 302 863, “equivalent to 58 per cent of 2019 levels”.
“With the relaxation of global COVID-19 containment protocols, tourist arrivals
have been steadily rising, reflecting the global demand for travel,” Haynes reported.
“The increase in airlift, though still not at 2019 levels, allowed Barbados to benefit from the rising demand for international travel. Airlift, particularly out of the United States, suffered from staff shortages as some airlines were unable to meet the demand for an increase in the number of flights.”
With the bulk of tourists coming from the United Kingdom, Haynes said this year’s return of the Crop Over Festival “had a positive impact on the sector, and arrivals for the [third] quarter were stronger than originally expected”.
Outside of tourism, non-sugar agriculture output increased by 3.6 per cent, and manufacturing grew by 3.6 per cent, while the non-traded sector – led mainly by the wholesale and retail segment – expanded by 2.7 per cent.
The Governor also said labour market conditions continued to improve.
“Jobless claims have reverted to a normal trend and, at June 2022, the unemployment rate was 9.3 per cent, down from 15.9 per cent a year earlier.
The three main industries accounting for improvements in the unemployment rate were tourism, wholesale and retail trade, and construction,” he said.
While the Central Bank’s forecast is that the economy will grow by an overall ten per cent this year, double-digit growth is not expected in 2023.
“Significant downside risks to the economic recovery remain, largely revolving around the challenging external economic environment that has impacted the availability and the price of international commodities,” Haynes said. One issue of concern is the fluctuating value of the British pound.
He said the bank’s analysis
concluded that “the type of tourists that we attract perhaps is not as price-sensitive [as others], but we can’t ignore the fact that these changes in the exchange rate are happening. Therefore, we have to monitor it and our marketers have to be able to manage that process going forward to be able on the one hand to sustain the British market”.
Haynes added that while Barbados’ economic recovery was expected to continue next year, “based on scenarios encompassing a weaker performance of the UK tourism market”, growth is forecast to reach between 3.5 per cent and five per cent for next year. ( SC)
Source: Nation
Growth, public debt containment important
AN ONGOING SOURCE of conversation in Barbados is the level of public debt and, by extension, the level of borrowing by the Government of Barbados.
In table 1, I share data on the public debt of Barbados over the 2005 to 2022 period as reported in International Monetary Fund Article 4 Consultation documents over the years. The table shows the total debt in a year and the change in the amount from the previous year. The change in total debt will depend on the level of new borrowing and the amount of existing debt paid down.
The data indicates that over the 2005 to 2022 period, total public debt in Barbados grew at an annual average rate of approximately 5.6 per cent and more than doubled over the 2005 to 2022 period. The most significant increases in debt over this period occurred in 2017, 2013, 2009 and 2007, while there was a major reduction in debt in 2018 largely related to the debt restructuring exercise conducted by the Government of Barbados.
The data does not appear to support the growing notion of larger than normal increases in public debt in recent years. As new borrowing takes place, the public should note that existing debt is also being paid down and it appears that while the new borrowing makes the news, the debt being paid down does not.
It is noteworthy that the average annual growth rate in debt of 5.6 per cent far exceeded the average annual growth rate in gross domestic product (GDP) of -0.21 per cent in the economy over this time period, hence the trend towards a high and generally rising debt to GDP ratio.
The trend where the growth in debt far outstrips the growth in the economy is extremely troubling and suggests that the level of debt and its growth represent a major economic problem for Barbados, which needs to be addressed by a combination of stronger economic growth and debt containment.
Economic growth is heavily influenced by the external environment, while debt
reduction and containment rely on strong primary surpluses (government revenues less government expenditure, excluding debt service), where policy-makers have much more control.
Fiscal discipline appears to remain the order of the day for Barbados.https://barbadosunderground.files.wordpress.com/2022/10/barbados-debt-numbers.png
– JUSTIN ROBINSON, Professor of Finance, The University of the West Indies Cave Hill
Surplus ‘eases borrowing need’
Haynes: $368m signals improved Govt accounts
GOVERNMENT HAS REGISTERED a $368 million surplus, signalling a “significant improvement” in its accounts.
This was reported yesterday by Central Bank Governor Cleviston Haynes during his third quarter press conference at the Frank Collymore Hall.
He said the surplus, achieved by September 30, the end of the first six months of Government’s current financial year, “eased Government’s borrowing needs and assisted with the repayment of debt service obligations”.
“For the first six months of the fiscal year, there was a significant improvement in Government accounts. Preliminary data indicates that the primary balance, which excludes interest expenditure, registered a surplus of $368 million, enabling an overall positive fiscal balance for the period,” Haynes stated while reviewing the economy’s overall performance between January and September.
“The more than ten-fold increase in the primary balance reflects the combined effects of the inflation dividend caused by rising prices and the containment of noninterest spending. “Revenue growth is anticipated to slow while expenditure, particularly on capital works, is anticipated in the second half of the year, resulting in an overall primary surplus equivalent to approximately
two per cent of GDP,” he stated.
The economist said Government’s total revenues in the first half of the 2022/2023 fiscal year “rose by $254 million, on the strength of broad-based increases in tax revenues”.
Value-added tax receipts grew by $86 million due to the pick-up in domestic economic activity, higher imports and a reduction in transfers for current year refunds to the Barbados Revenue Authority, Haynes reported.
“The higher imports also led to import duties rising by $16 million, but excises and the fuel tax incurred a cumulative decline of $22 million, in part due to timing differences in the transfer of taxes by the Barbados National Oil Company,” he said.
“Direct taxes netted an additional $115 million, of which the newly implemented Pandemic Levy charged on corporations and individuals raised a combined total of $31 million. Corporation taxes realised an increase of $37 million, benefiting from a number of new companies as well as improvements in the settlement of arrears. “Personal income tax collections increased by $17 million, reflective of improved employment, while the improved performance of property tax receipts were supported by increased real estate activity. Non-tax revenues were up $34 million as $20 million in grant funding was received to support housing development,” the Governor added. Haynes also said that excluding interest payments, Government’s expenditure “declined by $78 million, given one-off capital spending occurring during the previous fiscal year, including the recapitalisation
of the [National Insurance Scheme] ($50 million) and the purchasing of roll-out carts under the Sanitation Service Authority ($18 million).
“Grants to public institutions also registered a $27 million decline, given a shift in the timing of transfers to some SOEs (state-owned enterprises) while grants to individuals contracted by $7 million during the period,” he added.
“Goods and services rose by $47 million as spending on property maintenance, general operating expenses and utilities increased over the period. Wages and salaries remained broadly in line with the previous fiscal year, while spending on interest payments increased as the stepup interest rate feature on domestic bonds commenced.” (SC)
Source: Nation
Only $10m of $200m BOSS Plus bonds sold
GOVERNMENT IS BANKING on securing $200 million from Barbados Optional Savings Scheme (BOSS) Plus bonds sold to Barbadians, but local investors are not rushing to take up the offer.
Central Bank Governor Cleviston Haynes said yesterday that investors had bought between $9 million and $10 million of the Government securities so far, calling the response “quite slow”.
He said he believed this initial outcome was because “some of the nervousness that persons have post debt restructuring has probably been amplified by some of the public debate that has taken place about the Government’s ability to repay debt over time.
“And I think that that has probably impacted persons who may have been
considering buying these bonds. Therefore, I think what from our perspective we have to do is to try to get across the message that the borrowing the Government is trying to do, is really consistent with a sustainable macroeconomic programme,” the Governor said.
Barbadians have been able to invest in BOSS Plus bonds since September 1. The securities have a fixed interest rate of 4.5 per cent per annum payable on February 28 and August 31 of each year, with a minimum purchase of $500 and increments of $100 thereafter.
Government has identified the programme as one of its main sources of domestic financing for the second Barbados Economic Recovery and Transformation plan.
Haynes said the authorities believed that the objective of achieving a 60 per cent debt to gross domestic product ratio by 2035/2036 was a sustainable one, adding that “once you accept that is a sustainable path, then investing in Government securities becomes easier because you understand that this is a sustainable path”.
He said Barbadians not investing in domestic securities meant that “we are changing rapidly the mix between domestic and external balance for our financing.
“And while it’s important for us to have access to external financing, I think it’s also equally important that we’re able to develop a domestic capital market,” he stressed. (SC)
Source: Nation
Latest COMIC STRIP release by Central Bank, same old lies, all is well, ship not sinking, however sea floor is extremely close.
Willy predicts Income and Reserve Cover will be dangerously LOW in about 8 months, time will tell.
So in brief what you saying is this.
Tourism has only recovered to 58% of 2019 levels.
Of the $200M in bonds only 10M was picked up. This was a result of bajans bad talking the fact that government may not be able to repay them on the blogs. It had nothing to do with the fact wunna mash up the said Bajans in the debt restructuring where they lost millions!
Our debt continues to climb even though we have not recovered to 2019 level of economic activity as yet. .
Let the folws fluff bout the 9% increase growth but one must ask in relation to what?
The fact is our debt continues to rise at a faster rate than our economic growth. Its equivalent to getting a $50 a month raise but spending $70 extra a month at chefette.
In simple terms if we were a business we would eventually be insolvent in a few years. Now that no one wants the Bajan paper where does that leave uS? Will we do like Sinkler and force it down the NIS throat? Will we make the Central Bank buy it going forward? Will we try to tax the Bajan more? Will we be forced to borrow from the IMF in Fx because we can’t raise local funds from government paper sales?
Tell me Mr Haynes whats the plan?
@ John A
Does Mr Haynes look like someone with a Plan to you?
…or someone who reads a politically prepared script…and not that well.
@Bush Tea
Is it his job to announce a plan?
Well well , the doom and gloomers , John A and Bush Tea out early as expected.It seems to me that these two do not want Barbados to recover and do well.Always a lot of negativety.Really sickening like the drms everyday on the call in programmes.Tell us what are your alternatives.I believe tourism will rebound strongly this winter season which will kickstart things to the benifit of most bajans in terms of jobs etc.I gone.ll
@ Bush Tea
To be Honest I think he knows he can’t say everything on his mind unfortunately. The Plan though must come from him and the MOF. Thing is the IMF is also saying that these issues must be addressed now and the MOF has warned that more is to come.
Maybe we will hear about the plan after Xmas who knows. One thing is for sure the IMF has signalled it can not be business as usual going forward.
Wait the fowls out early too it seems. LOL
Is it his job to announce a plan?
~~~~~~~~~~~~~~~~~~~~~~~~~~~
Is this a question or a threat Boss? 🙂
ANYONE who is in ANY kind of leadership position, and who does not have a clear and unambiguous plan AND a strategy for the execution AND MEASUREMENT OF SUCCESS for their portfolio, is a jackass.
…as are we who then take them seriously.
Talking shiite about 10% growth – against a backdrop of MINUS 20% the previous year can ONLY be intended to bamboozle brass bowl Bajans.
Placing stock on ‘tourism growth’ when EVERYONE knows that our tourist market is (literally) DEAD from covid; from a shattered British economy; from the Russian fuel crisis; AND from the fact that we just told them to piss off from their commonwealth…. is about as logical.
So NO! ….It is not his job to announce a plan…
It is PURE COMMONSENSE that he does.
…and more importantly, it is an insult to intelligent Bajans to have NO DAMN PLAN, and to just be operating in REACTIVE mode.
….fortunately, there are not that many people being insulted.
How can tourism rebound strongly with the pound at its weakest point in years and airfares at the highest for years? Also the Brits are reeling with Inflation. Did you not read the concerns of the Governor about the effect these issues will have on winter recovery?
If you barely come here today with out facts you going get shredd. It is the dam party politics from wunna fowls that stands in the way of any form of structured discussion on the economy.
“ Haynes added that while Barbados’ economic recovery was expected to continue next year, ***”based on scenarios encompassing a weaker performance of the UK tourism market”, growth is forecast to reach between 3.5 per cent and five per cent for next year. ( SC)” ***
Now, if you tell me that something would grow 10% today but next year this time it would grow 3% ; you’re already telling me that the growth will be 7 % less in the coming year and then you tell me it’s on a trajectory of growth but that growth will decline by 7 percent .
Interpretation: no growth.
Peace.
In simple terms if we were a business we would eventually be insolvent in a few years.
Xxxxxxxxxxxxxxxx.
Amazon and testla. Two companies that operated making a loss for years. Where are they today ?
The auto industry had to be baked out by the us gov. Also was big bank
Recently the airline and cruise lines.
@John A
Do you agree with the Governor’s input about the capacity of the economy to service is debt especially now that we have access to cheap funds?
Also your view about the debt to gdp increasing because the economy contracted because of the pandemic?
We will agree over reliance on tourism continues to be a problem.
Earlier this year or late last year USA was forecasted to be in recession at this time
After first two quarters of negative growth 3q gdp up over 2%
@Bush Tea
The Governor and Central Bank executes on government’s fiscal/monetary positions through the MoF. The Governor has the option to resign if he or she disagrees, unlike DeLisle was disinclined to do.
Boys and girls, a confession.
I love numbers and have made my living by working with numbers.
They will throw in acronyms (GDP, RHS [RHs?], GIR, which may slow down ordinary Joe. They will produce beautiful charts, but if you ignore the confusing acronyms you may be able to get some information for yourself.
Her is what I pulled out for myself.
Take the last chart (^:07 a.m.)
It would appear that domestic debt decreased in 2018 and 2019, but was on the increase for 2020, 2021 and 2022.
It would appear that the domestic debt is reasonably flat, but the international debt is increasing.
Let me add that the current 2022 Government debt is higher than that 2015, 2016 and 2017. As we are in October, the final number for 2022 the final number may be higher than 2015. I am not seeing the magic.
But these things are above my head.
Have a great day y’all
@John A
Rebound in a context I.e. pandemic base level?
Stupes. Have you any idea how much Bezos and Musk along with shareholders pumped into those companies to keep them afloat? No, well 100s of millions. They recovered because they brought products to market that consumers wanted and Wall Street saw a future in.
Tell me where can I buy a share of Bim Inc on the Dow or major markets and what is today’s offer price. LOL
Wunna really catching at straws today true. So 2 in where is Enuf now?
Stay focused John A on the domestic front.
Last
“How can tourism rebound strongly with the pound at its weakest point in years and airfares at the highest for years? Also the Brits are reeling with Inflation. Did you not read the concerns of the Governor about the effect these issues will have on winter recovery?
I am glad that you pointed out that tourists may be encountering their own set of problems as the economies of theirs countries falter Besides what is happening in other economies, tourism can also be influenced by news at the destination.
I do not know if to consider these guesstimates are optimistic, pessimistic or true, only time will tell.
Jesus
Where do typos hide?
You reread and you don’t see them.
You post and they appear.
🙂 I think the blog-master is out to discredit me 🙂
For those lacking a sense of humor, the last line should not be taken seriously.
Have a great day y’all.
@ David
Yes exactly, when we have returned to precovid levels we would have at least achieved that. With tourism 3 years later only at 58% percent of 2019 levels, anyone with a grain of intelligence will see we are way off of 2019 still. The thing is though with that said, our debt has surpassed 2019 even on our poor recovery performance. It is therefore correct to say we are today worst off than in 2019 in real terms. One then must also consider for the Bajan that we have all faced a period of high inflation so where does that leave the jet ski operator and hair braider, far less the bar and restaurants and hotels?
Numbers can be played with all day and I for one have seen it done for years, but as I always said reality can not be played with. The governor has a few fundamental issues to deal with on his revenue and expense side. We basically have an income issue vs our growing debt, hence creating a challenge to finance it net of borrowing.
Also please don’t brag about the reserves as with tourism at 58% of 2019 levels, we all know most of those reserves are borrowed money. They therefore are not what one would deem as true net reserves.
Picture a man with $1 million on the bank saying he is a millionaire with debts of 1.25 million owed. Is he lying? No he just omitted to deduct his liabilities thats all.
@Theo
Yes we are in a stage of volatility like never before. The UK unfortunately right now is our biggest market and they are having a tough time with their currency and inflation. I have many friends and business associates their and many have said liquidity is tighter than ever with the average Brit. Many Brits this winter will make choices this year between buying food or heat.
“The demand has been quite slow,” he reported on Wednesday, while disclosing that only around $10 million had been taken up since it became available on September 1, 2022.
The take-up of the recently issued $200 million Barbados Optional Savings Scheme (BOSS) Plus investment bonds has fallen short of expectation, according to Governor of the Central Bank of Barbados Cleviston Haynes.
@John A
The point about the international reserves is that allows the government to defend the peg and but time to give the economy a chance to expand as economic activity picks up. The point the government and Governor makes is that there is capacity to service the debt.
The blogmaster’s concern continues to be over reliance on tourism and services.
@John A
To be fair to Governor Haynes he hedged by saying there is uncertainty in UK source market and disruption from the ongoing conflict with Russia and Ukraine.
You would have seen mortgage rate in the US has jumped to 7%?
Since the civil servants do not want to play BOSS, our honourable government should kick-start the civil servants. I propose a 30% salary cut until our civil servants have paid their 200 million contribution.
In any case, it is clear that our civil servants are selfish and unpatriotic. True patriots buy government bonds, even if they know that investing in toilet paper next to the termite colony would be safer.
Precisely
Money was pumped into those two companies to keep them afloat
Money was pumped into the auto and banking industries to keep them afloat
Money was pumped into the airline and cruise line. To keep them afloat
And money is being pumped into the Barbados economy to keep it afloat
So what’s ur argument about if it was a business again?
@Tron
You may get your wish. DPM Bradshaw has been jawing about lack of productivity in the public service.
A bad winter in Canada will chase more Canadians to Barbados for a winter break.
Can’t speak to the UK or USA but
For the coming winter season people that want to travel most will already have their tickets The closer it come to travel time the more expensive the tickets get
I for one is already book if conditions change that I cannot travel then I will just get a refund
The 58% is for air arrival only
Or should I say there is no real cruise arrivals as yet
@ David
Yes I heard where the Gov hedged his forecast and so he should.
Now on the point of high borrowed reserves giving us head room the Gov forgot to mention the following. We can only sustain high reserves if we continue to borrow heavily as our FX earners are way down on 2019. Secondly if our earning to debt ration ration continues to increase we will need to borrow heavier going forward too.
We will surpass 2019 gdp before tourism return to 2019 levels
Between January and September 2019, Barbados welcomed 522,583 visitors through the enhanced Grantley Adams International Airport,
Do the maths
Out
I thought the report was ‘not too bad’. Particularly since the gains came in Q3.
That room rates improved with volume is also good, meaning hotels didn’t ‘buy the recovery’.
Unnoted by the various articles, is M0 (Monetary Base) increased again, and there was a line in expenditure which referenced the “step up” in debt interest (reprofiled) as beginning.
It is important that you deliver on your projections, and they have. A projection of 3.5-5% growth is fair, and better than a 2% decline?
I still don’t fully appreciate the accounting associated with the 🔵 bonds. Without a full picture of all debt, what is new vs paid off, and the forward implications, involves a lot of guesswork. Similarly, without a full listing of the CBBs investment portfolio, appreciating a ‘temporary decline’ is more guesswork.
I thought DrJR comments were interesting, isn’t he a Director of the CBB?
@John2
“The closer it come to travel time the more expensive the tickets get”
This is an old fallacy I have proven incorrect many times.
A sibling booked flights in the upcoming winter season to Bim, in July, supposedly during some big seat sale event. I looked last week and found cheaper fares. In fact, they were odd, big differences between one day and another, and not just weekday vs weekend.
One of the COVID derived ‘benefits’ for travellers (vs providers) is they have to be more flexible. I am part of a 12 person golf trip in December, it was booked since Feb, and last week somebody found a completely different location at half the cost. Boom, we changed. The ‘non cancellable’ game is over in many segments
Central Bank Governor now drinking “new” RUM, poor quality that instantly attacks brain function & reasoning causing a “FOG”.
Did not see any mention of most world economies potentially heading into a long term RECESSIONARY period with associated HIGH INFLATION.
NO PLAN, oh YES, correction we will boost tourism, build a couple of new hotels with Chinese loans and save the country, same old same old.
Tron being generous in suggesting only firing 30% of the civil service, Willy would suggest 60% of civil service, 100% of the politicians, 99.9% of all lawyers especially the “QC’s and new colonial KC’s”. Did Wily not here that Barbados is now a Republic and is now free of colonial ties, ha, ha.
” Vacations to go.com have reported discounts on packages as high as 82% for late bookers. ”
In what appears to be the new norm people are waiting to book at the last minute as deals have become better for those who have learnt to work the system.
Facts vs fiction. Dem words not mine. Lol
Low water pressure has forced the early closure of The St Michael’s School.
Listening to Brasstacks. Nuff Bajans vex.
Vacation to go . Com
Man you need to read before you post
Seriously?????
The blogmaster invites you to join the discussion.