Barbados has announced a two billion dollar (One Barbados dollar=US$0.50 cents) stimulus package even as the country stands to lose $400 million in tax revenue.
In a 90 minute radio and television broadcast on Wednesday night, Prime Minister Mia Mottley shared the Government’s economic plan to provide incentives and stimulate the economy.
“This is the biggest package of spending initiatives ever rolled out over a two-year period on a supplemental basis from what we would otherwise have as our core activities,” Mottley said.
Mottley said that the plan would also focus on a public and private capital works programme (PPP), increasing the island’s self-sufficiency, the creation of a Barbados Tourism Fund. In addition BDS$210 million would be spent on families affected by the shutdown.
She said the economy prior to the pandemic was sticking to the course, providing “us with the reserves, provided us with the room, provided us with the credit and enough standing now regionally and internationally for us to launch this most comprehensive integrated programme that the country has ever seen, largely because we have never had this kind of crisis facing us.
“We’ve focused the programme on supporting those who have lost their jobs in the shutdown and to keep those as far as possible who have jobs into their jobs. The economic plan has five parts…and the effect of them is to fill the hole in spending in this economy to the tune of near $2 billion over two years.”
She said she hoped private sector would be inclined to keep staff on board, saying “this is largely new and which I will announce tonight is a series of measures that will inject BDS$215 million one way and a BDS$200 million fund being mobilized on condition that we hold on to as much staff and jobs as possible”.
But Mottley acknowledged that the COVID-19 pandemic would result in the government not being able to collect an estimated BDS$400 million in tax revenue.
“We estimate that over the next 12 months, and we have had to revise upwards the numbers that we spoke about three, four weeks ago in Parliament, that we will lose now in the vicinity of $450 million in government’s tax revenues as a result of the economy being fully, partially shut, or only slowly opening.
“There will be less income tax collected, less corporation tax, less Value Added Tax (VAT), less excise tax, less duties, less fuel and air transport levies. We have spent or committed over $75 million in health related expenditures over the course of the last few weeks on different items.”
She said the difference in public revenues and expenditures could worsen by a cumulative BDS$700 million and gave the assurance that foreign reserves were enough to see the island through the crisis.
“Just before COVID-19 struck, our reserves had reached BDS$1.55 billion, the highest level at that time recorded on a like-for-like basis for a while. Today, as a result of the low–interest borrowing from our partner, the Inter-American Development Bank, our reserves today as I speak to you are just over BDS$1.7billion. It is more than enough reserve cover,” Mottley said, announcing also that a mission from the International Monetary Fund (IMF) was here examining the progress of the local economy.
Meanwhile, the government has announced a relaxation of the 24 hour stay-at-home order with Mottley indicating that an 8:00 pm to 5:00 am (local time) curfew would instead be imposed.
But she warned as the government as moving to relax the measures put in place to prevent the spread of the virus, complacency must be avoided.
Mottley said due to progress made in the fight against COVID-19, Barbados was now moving to Phase 2 and that as part of the new proposals, businesses involved in construction and mining, landscaping services, food and beverages manufacturing and retailing, supermarkets, finance and insurance companies, automotive stores and workshops and legal and accounting services, will be allowed to reopen from May 4.
She said that some of the government departments would also be re-opening insisting that any work which required human contact would not be permitted.
She told the nation that the easing of restrictions would come as a relief for Barbadians, but maintained that she was not willing to risk lifting all restrictions until a cure for COVID-19 was available.