Barbados on December 7th will be heading into another IMF program named BERT 2.0. The PM of Barbados said in a recent press conference that next 2023 will be hard for all of us.
Barbadians are in a serious economic pit as the global economy is set to run into turmoil and price inflation will push the cost of living /goods& services to higher as the festive holiday season kicks in.
Minister of Industry Davidson Ishmael recently recommended Bajan consumers to buy local as , as far back at October 2018, government placed VAT on online transactions to encourage local shopping. With NSRL removed local prices were supposed to drop instead they increased. While patriotic by Minister Ishmael the high cost of living in Barbados has been eroding paychecks and savings as people are shopping according to what’s affordable to their pockets.
In July, Prime Minister Mia Mottley announced a Social Partners Food Prices Compact that would result in a reduction of prices on 47 items for a six-month period In September 2022 government minister Kirk Humphrey admitted that the Prime Minister’s compact has failed to provide an ease to consumers from price increases because businesses did not stick to the prices protocol that was agreed to with the private sector and government. The continued onslaught of price increases in Barbados was further highlighted by the Barbados Consumer Empowerment Network on Dec 2022 and with Christmas around the corner price gouging will be worse.
The Mottley government has collected the highest levels of tax revenue ever in the history of Barbados as a result of high prices. Since the pandemic the governor of the central bank said in publications that government has reaped significant revenues from what he termed an inflation dividend therefore tax payers should expect no tax relief. Before the 2018 debt restructuring government had the ability to raise money by attracting investment locally. The absence of this traditional money led to government using the taxation route to raise these funds instead hence the garbage and sewage tax, gas tax, land taxes , levies and fees . Unfortunately citizens should expect taxes increases as a condition of BERT 2.0 set to replenish the $1B hole on the central bank’s balance sheet , repair the NIS $1B debt hole. All attempts to raise money locally by government did not meet the intended targets for e.g BOSS , BOSS 2.0 nor the central bank 120 M bond offerings.
This inability to raise capital locally is very problematic and serious attention should be paid to it as money is needed to get projects such as Hyatt moving. The continued stalling of Hyatt should be questioned as Developer Mark Maloney said in November 2019 that details of this investment potential would be shared by the financial institution arranging the funding even as he and his team await Town Planning permission to start building. Since then Town & Country went under serious changes internally, A new planning and development act 2019 was passed , A planning & Development amendment bill was also passed , a new director of planning and development was appointed.
Further evidence of how problematic the situation is that in March 2020 PM Mia Mottley said that following meetings with the International Monetary Fund (IMF) over the next two weeks, she was hoping to get a “relaxation” on the targets under the four-year Barbados Economic Recovery and Transformation programme, and a stand-by “precautionary” financing facility. This, she said, would allow her 22-month-old administration to “move quicker” on other capital projects that would have otherwise not been accommodated. Back in November last year, Prime Minister Mia Mottley during the official opening of the Golden Square Freedom Park suggested that the construction of the proposed Hyatt Centric Resort could commence early in 2022.
To solidify my point of the seriousness of situation at play , In September 2022 Senior Minister in the Pm’s office William Duguid announced that work will start soon on the Hyatt he said: “I understand that the Hyatt had some setbacks with its financing but they are soon about to start the construction of the Hyatt.”
The inability of government to gain investment on the local market is severely impacting government’s ability to ease taxes despite having a surplus of revenue earned mostly by said taxes ,also it does not provide government with the incentive to intervene by shielding consumers from price increases. As taxation is charged as a percentage of price common knowledge would say that higher prices in stores and supermarkets gives the tax collector a higher rate of return.
In the face of a certain 2023 world recession Barbadian households will be paying an FTC & light & power agreed price increase in electricity bills , the privatization of the BWA and increase in water bills , the leasing out of GAIA airport for 40 years , demolition of non-contributory pension and an increase in NIS contribution rates ,job losses in government and further price increases in the supermarkets and government services. The income of the middle /low income earners is dwindling and the debt restructuring has caused market failure in local investment markets & repair of the trust with local investors is essential to providing an ease in the cost of Bajan living
The king of all monsters is the continuation of expenditure cuts in Barbados’ IMF program and by extension cuts in money to all government ministries , the pension reform, as currently happening in Uruguay are workers protest against government for increasing pension age from 60-65, Barbados’ pension age may go to 72. the downsizing and privatization of many government operations include Urban & Rural, CBC & Transport board and an end to covid expenses ,cutting of the adopt a family $600 program and ash program expenses which indeed will feature lay offs.