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Review of Barbados’ Economy for Q1’2024

Central Bank of Barbados

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Despite challenges, Barbados’ economy grew in early 2024, further strengthening key economic aggregates like the current account balance and debt-to-GDP ratio. Amidst challenges such as elevated foreign interest rates, geopolitical tensions, higher freight costs, and adverse local weather conditions, the economy sustained its growth trajectory. Real GDP increased by 4.1 percent during the first quarter of 2024, fuelled by visitor arrivals that surpassed the industry’s 2019 peak along with broad-based growth across various sectors. This economic expansion contributed to achieving an external current account surplus and a further strengthening of financial sector’s resilience. Moreover, it helped to attain the 2023/24 fiscal year primary surplus target and further reduced the debt-to-GDP ratio – read more.

– Review of Barbados Economy – January-March 2024. (Source: Central Bank)
 
– Governors Presentation

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175 responses to “Review of Barbados’ Economy for Q1’2024”

  1. angela cox Avatar
    angela cox

    David yuh hear the truth
    The 4.1 percent does not give full accountability of the economy
    Barbados is not just an economy but a society
    This 4.1 growth speaks to one percent of an economy relying on Tourism a sector which benefits mostly
    Meanwhile the 99 percent have to eat salt

  2. John A Avatar
    John A

    @ David

    You are correct both the state and private sector have done little to put themselves in a better position to face the next virus, or what ever may come along. The state has gone back putting all its eggs in the toursim basket and the private sector is business as usual with the exception of a few entities.

  3. The OG Avatar
    The OG

    https://barbadostoday.bb/2024/05/07/cyberlies-cannot-go-unchecked/amp
    This is a ‘good’ read. Would be interesting to hear what others think.

    Suspect someone is using a pseudonym.

  4. David Avatar
    David

    https://youtu.be/z84elKQxCqs

  5. Hants Avatar
    Hants

    Home again.

    https://www.cbc.bb/news/local-news/welcome-extended-to-liberians-on-sankofa-pilgrimage/

  6. angela cox Avatar
    angela cox

    When is this govt gonna have a policy or policies than can empower the mostly poor black community
    But Paint!

  7. NorthernObserver Avatar
    NorthernObserver

    David
    Your 2.48 reel, is titled Diaspora investing, but the Minister only speaks about unlocking local savings.
    The current legal system is not fit for purpose. The most basic of actions can be delayed and tied up for years.
    It was December 2014, the date on the conveyance to transfer lands at Paradise, the collateral Barbadians inherited when $120M in loan guarantees were defaulted. Later the Auditor General would discover it’s office could find the land conveyance, but not the associated funds for payment.
    Nearly 10 years later, the matter is still in the Courts.
    What hope does a private investor have, when the GoB on behalf of its citizens cannot solve a matter like CBL?

  8. David Avatar
    David

    @NO

    Could be the video did not capture his full talking points. Maybe the purpose is to check that box. So far take up of government paper indicates there is still lukewarm confidence for government paper. There is where the rubber hits the road after all the flowery talk.

  9. The OG Avatar
    The OG

    Wait a minute. They cuss the diaspora. They don’t want our voices to be added to the discussion, but always mumbling about funds from the diaspora.

    It looks as if they believe ‘a diasporan and his money are soon parted.’

    Gotta run, but on the alert for the scam/bungle of the week.

    Have a great day, all.

  10. NorthernObserver Avatar
    NorthernObserver

    Back when first released, Boss+ were yielding 4.5% over a 5yr term. Libor rate was +/- 1%. Libor is now north of 5%. The Boss+ rate remains unchanged, partially because the commercial bank savings rate hasn’t moved.
    It is likely now less costly to pay 4.5% on Boss+ Bonds, than for GoB to borrow on external market. Given the risk factors, Boss+ should be at least at 6.5%.
    Failure to recognize some elasticity in the local market, suggests how tight the public finances are. They need shorter term than the election cycle with higher returns.

  11. David Avatar
    David

    @NO

    In your opinion would domestic demand for BOSS+ be sensitive to price?

  12. David Avatar
    David

    https://youtu.be/-tg0Tv-KrHA?feature=shared

  13. NorthernObserver Avatar
    NorthernObserver

    David
    IMO most instruments of this nature are sensitive to price.
    If BU is any guide, apart from the few who had DIRECT exposure at the time of restructure, the real noise was heard when the effects on the NIS materialised.
    If confidence is an issue, this plays to shorter term, higher RoR. Just because the prevailing commercial bank savings rate is near 0%, doesn’t mean a 4.5% RoR is good. Especially after the rate hikes of the past 18 months.
    The average Barbadian isn’t buying Bonds anyway. And for those who took lashes at the restructure, the pay back is far from complete. Weeee get told the GoB is servicing these in a timely manner, but really do not know.

  14. Wolf In Sheep Clothing, Warning, Double Warning Avatar
    Wolf In Sheep Clothing, Warning, Double Warning

    Time time

    Time is what we need so they say
    Give it a little more time time

    Well you see
    Time is running and passing and passing and running and running and passing

    So you all better get it right at this time
    As there might be no next time

  15. John2 Avatar
    John2

    How is the sugar crop going especially the operation of the new co-op?

  16. David Avatar
    David

    https://www.instagram.com/p/C6uWLisLaUa/

  17. angela cox Avatar
    angela cox

    Barbados Power and light receives an increase from the FTC
    No matter how small the increase it would affect the monthly pocket books of the people
    Time govt takes another look at the minimum

  18. Hants Avatar
    Hants

    crypto.

    https://barbadostoday.bb/2024/05/10/what-the-governor-doesnt-know-about-crypto/

  19. TLSN Avatar
    TLSN

    This government, in plain sight, is altering our demographics. It has proven itself incapable of providing the right conditions for its young people to feel comfortable to reprocreate.

    Barbados third class citizens will, inevitably, migrate to greener pastures. The void in the population will be made up of prosperous foreigners whom are of child bearing age.

    “With a rapidly ageing population, low birth rate, and outward migration of young university graduates, the Government has factored in the presence of thousands of Welcome Stampers and their families into its evolving population expansion thrust.”

    After being elected, Mia was true to her words when she screamed out “watch muh”. Spare a thought for the domestic Bajan whom we all know as family members and friends.

    Peter Thompson’s original idea was hijacked. We are now witnessing the unintended consequences of this.

    https://www.businessbarbados.com/articles/the-barbados-welcome-stamp-a-mark-of-approval

  20. David Avatar
    David

    Bad bank customers

    IF YOU ARE A BAD BANK CUSTOMER, expect to get different treatment from good bank customers.

    Different treatments could come in many ways. It may come in terms of a longer time to repay that involves more payments to the bank, or higher interest payments.

    The recent publication of the International Monetary Fund’s (IMF) dealings with Barbados is typical of commercial banks’ modus operandi. When Barbados went to the IMF in 2018, it was on a sick bed with heart complications. It might have been at the stage of a cancer patient complicated with diabetes. It got the typical bank treatment. Harsh terms were applied to loan conditions. Knowingly or unknowingly, those harsh terms were felt by the citizens, some of whom lost savings.

    Personally, I have never agreed with increasing the hard conditions of a borrower in difficulties.

    This is what it seems that our helper-in-times of difficulties has all along been guilty of doing to us.

    You see that is why I have been saying that there will come a time when the IMF will take the step that bankers take when a customer’s (country’s) financial manipulations are out of control. That is to say, when things are happening that do not make sense. I do not think that borrowing money from Sam, Couch, and the Duppy and calling it foreign reserves can be regarded as common sense. We cannot use the “foreign reserves” to pay Jack!

    Just as I would be required by my head office to take extreme measures by selling the assets that can be sold and stop propping up the customer, the IMF will be told in due course by its “head office” to put Barbados on a footing that makes sense. I hesitate to say, but that will mean to match its living standards with its real financial assets.

    Like any bank, the IMF is accountable and has to balance books.

    You see, right now the IMF is at the stage where it is imposing measures that a bad customer would endure, but soon its “head office” will read the riot act and apply heavy manners. We now learn that extra interest payments apply to IMF helping loans attached to Barbados even when the loans are not yet drawn down but agreed in theory. That is unconscionable. But we as a country seem to justify it so that we can keep up with the Joneses and continue on our merry political way wearing blinkers fashioned from the past.

    We put off the day that the previous administration fashioned for us, saying that we would now live under a cloud. Recent newspaper information has shown us the composition of that cloud is an onerous condition even attached to money not yet drawn down and in our use. The nefarious situation is not mentioned in our Central Bank report, our supposed watchdog.

    We are now desperately trying to increase earnings from tourism. We are now desperately trying to build hotels to boost tourist receipts that will take at least five years to bear fruit – when the time for reaping is now. Do we not see that we have reached the stage where even this borrowing to support the foreign exchange requirement will be called into question by new lenders?

    Just as we have been objecting to the big difference in accessing loans at the same rates as northern countries, we now come to the realisation that we are paying penalty interest. But what do you expect? It is a case of mostly lawyers dealing with bankers, members of two different tribes with voters in between.

    The Wild Coot’s wings are now clipped, but his message will remain the same. Yes, I agree that we are seeing an increase in tourism for which there are many reasons, but we are seeing an explosion in the cost of living as we continue the same lifestyle.

    Almost all food items have a value-added tax charge. Does it mean that whatever the cost, we will not change even if those left behind are cut adrift?

    Instead of saying that we now have an increase in the workforce, we can also say that all hands are now on deck in order to meet the headwinds, including the penal loan interest of our helper in distress.

    Why has this charging of interest on loans not yet drawn down only now come to light? Were we not paying this all along? Maybe if the commercial banks are doing this and calling it commitment fees, you already see it happening with the loan arrangement from the IMF.

    Harry Russell is a banker.

    Source: Nation

  21. David Avatar
    David

    The wind in the willows economy

    GOOD NEWS ABOUNDS! The economy is back or so they say! May it be the case that a breeze, once of unfounded confidence, becomes now more so a vengeful wind. A wind in the willows. Here I refer to a very popular children’s novel from 1908.

    Much later on, its material spawned a children’s stop motion animated television series that I was quite fond of.

    Running from 1984 to 1988, this classic followed the daily exploits of central protagonists: Mr Toad, Rat, Mole, and Badger. Each character brought a different flair that made them more relatable to children.

    Life lessons in each episode were explored and definitely imparted on us who were born before 1990.

    I used to find myself drawn to Mr Toad and Badger. The young people of today would say that Mr Toad was “scenes”. He was rather boastful, wealthy, impulsive, and thus likely to be involved in or driving the show’s shenanigans.

    Conversely, we had Badger who was a rather responsible and steady hand, often being the voice of reason. He was, to put it bluntly, the foil to Mr. Toad’s ways. The wind in the willows blew and would tell of their episodical differences but Badger normally led with what was consistent and seemingly better for the group’s wellbeing. If they followed Mr Toad’s ways, like in the episode he continually crashed cars that he bought because he had the money to do so, I am sure the wind in their willows would have stopped blowing quite a long time before the series finale.

    Pathway to success

    Economic pathways to success tend to resemble those adventures written in the Wind in the Willows. Even more so these reflect the responses to the economic reports of varying natures.

    The television series stretched the content for longevity. Nonetheless, the millennial in me has plenty examples to draw from to attempt to make my points stick today. The Mr Toad approach, for the purpose of this text, is when positive economic news is followed by what holds as illogical statements of consequence.

    Such tends to include the derivation of policies, actions, or intent which may be similarly deemed to be spurious or lacking rigour. Many politicians are likely to respond to positive economic reports in this way.

    Political objectives may seem, for example, to lack economic foundations of what makes a small island developing state grow. And it is for that reason that very few ever employ the Badger approach. This one I deem to be quite relevant when economic forecasts are met with cautious optimism.

    It happens also to be the best approach for policymakers as it allows for more robust forecasts. These result in better public finance (that is, tax) planning strategies, public accounting, and fiscal expansion strategies.

    Similarly, this stance is relevant in monetary policies as well.

    The wind in the willows blew through Barbados last week and it was quite warm. Note the following reasons for celebration: (1) the five-year achievement of primary surpluses by government; (2) a two year decline of public debt-to-GDP; and (3) record levels of tourist arrivals. As a side note, I wish for the day when our economic key performance indicators can better accommodate a better estimate of tourism’s contribution through average or dynamic spend per tourist.

    But to my point, I would place a “combo wager” and posit, quite successfully, that this triple play of joyous news will result in some bold fiscal strategy meant to repeat such a boom in performance. The Mr Toad Approach as it were.

    I expect that some other development project (construction or otherwise) that was not mentioned at any point during the Budget will make the headlines quite soon. Let me state that I am not inherently against anything developmental but I have a condition. Government can’t be the one to finance it especially if it is private sector led. So I believe that the state will once again be asked to assume significant risk and underwrite the backend of the project. Basically, it will, in this case, be asked to write off taxes against the project either on the importation of materials or on the first few years of profitability. Remember though that Government has been hamstrung by public debt and International Monetary Fund (IMF) financing to even implement this sort of fiscal strategy. It kept well in avoiding this for as long as possible. It also built a “healthy” rapport with the IMF and is in the process of doing so with the international financial community.

    But fiscal success in CARICOM typically results in a too familiar outcome. So my worry is much more profound than what I revealed so far.

    Mr Toad approaches are used by governments within the Eastern Caribbean especially when there is great news. There’s clear historical precedent and it often sets our economies back some years. I can opine that such tends to stall social development far worse than it hampers GDP on the surface. You can take from many examples but here are just a few: (1.) The years of great oil and gas profits earned by the government of Trinidad and Tobago were continually met by years of irrational spend and the near depletion of those resources a few times; (2.) After St Vincent and the Grenadines experienced the region’s fastest growth for a period in the early 2000s, its government began to invest in or underwrote some very ambitious projects that resulted in cost overruns. A key example is Argyle International Airport at 45 per cent according to some estimates. This loss was equivalent to about 1.6 per cent of GDP for each of the six additional years of construction past the project deadline. I could go on.

    Risk takers

    The Badger approach in the region, and therefore Barbados, would always emphasise that governments should be risk takers on economic and developmentally-focused legislation.

    Ironically, it is Bermuda and the Cayman Islands which continue to lead in this regard. I note that they are still British colonies. Through the aforementioned mechanism, however, the state better “governs” the risk of private sector-led projects. It better focuses its resources on regulation as opposed to being diluted through active participation.

    It is more so equipped to actually lend assistance through more effective lobbying on the international stage. It will at that point be not as dependent on, say, the Prime Minister being the sole platform for international lobbying on all things concerning a country. I may have oversimplified the Badger approach but there are leading examples. To this point, I mentioned the Cayman Islands earlier. Let’s be facetious and say that “Badgerism” allowed for them to have a very robust Freedom of Information Act that uncovered what they termed the scandalous affair between Cayman Airways and the Government of Barbados. We have already explored the weaknesses and long term strengths of this relationship. For the most part, it was quite “Toadian” from conception and, as a result, the wind in the willows eventually blew that house down. As it does with all the schemes by Mr Toad.

    Jeremy Stephen is an economist/ financial analyst with extensive experience in private equity and economic consulting in Barbados and the region. Email: economistfeedback@gmail.com

    Source: Nation

  22. David Avatar
    David

    $1.6b deficit will be fixed

    DR KEVIN GREENIDGE, Governor, Central Bank of Barbados

    ON PAPER, we have got a $1.6 billion hole but if you go back to the beginning of the Barbados Economic Recovery and Transformation programme, we have a strategy to slowly put any profits into filling the hole, and eventually, when Government is in a much stronger fiscal position, the [Central Bank] Act requires them to issue a bond to cover the hole.

    Many central banks in the world carry a balance sheet hole, a central bank is not like a typical company and I have to explain this many times to persons. I come not just with central bank experience but from the International Monetary Fund side, you don’t worry about that so much. Do you know why? Central Banks are what you call infinitely illiquid.

    In fact, if you look at the Australian Central Bank their hole is $33.5 trillion? What does the hole mean? If you have a company and your assets are less than your liabilities, so you have a hole, any time your creditors come calling, what are you going to do? You have got to shut up shop so you are in trouble. Think about a central bank. What are my liabilities? All the money in the system is our liability, but central banks are infinitely illiquid. So yes, you want to fix your balance sheet but it isn’t something you go to sleep worrying about when the night comes, many countries in the world, [including] developed countries, have a hole in their balance sheet.

    We will fix it but we want to take time, there are other priorities. We are not going to ask government to ‘give me a bond now for $1.6 billion’ and then you are going to tell me the Government’s debt has gone through the roof. We will wait until the economy is back and everything is growing but there is a plan, that’s important, and if you look at the plan we are going to put profits slowly into the hole but not at the expense of living.

    (Central Bank Governor Dr Kevin Greenidge gave this response to a question during his recent first quarter press conference.)

    Source: Nation

  23. Donna Avatar
    Donna

    I leave all the number crunching to those who don’t mind the grunt work. Deeply analysizing the “re-arranging of deck chairs on the Titanic” is not my thing. It is a dirty job, but I guess somebody has to do it. I, however, give them a brief look through and assume that some shady statistical shenanigans are in the mix. That is the way of career politicians and their associates. This is the one time that to assume does not make an ass out of u and me.

    However, this knowledge of bullshitery fails to elicit the required response. We see that “the math ain’t mathing” and we continue to look for some ship to rescue us.

    No white man’s ship is going to rescue us! That is not their mission. Their mission remains the same as the first white man’s ship!

    What are we doing to rescue ourselves? This requires a new mindset. This lifestyle is unsustainable. Where is this new mindset being cultivated?

  24. David Avatar
    David

    https://barbadosunderground.net/wp-content/uploads/2024/05/Tenhabitat-365×480.png

  25. David Avatar
    David

    Another successful IMF review?

    https://jamaica-gleaner.com/article/business/20240522/barbados-receive-more-imf-support

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