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BARBADOS

Financial Stetement

dgetary Proposals Presented by The Rt. Hon. Owen S. Arthur Prime Minister and Minister of Finance and Economic Affairs

Tuesday, August 24,1999

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I have said elsewhere that the year 2005

Introduction

represents a special date with destiny for all

Mr. Speaker, I am very conscious of the fact that this year's financial statement and budgetary proposals are being presented to this Honourable House on the eve of a new century.

In the ordinary scheme of things, the start of a new century and in this case, a new millennium,

can

be

no.

more

than

Caribbean economies.

What we cannot do is wait until that date

has arrived to begin to make the adjustments that we know in advance will be required of us.

It is a simple matter. Sir of a stitch in time saving nine.

a

chronological milestone reflecting more a sense

of continuity than a drastic departure from the past.

There is however nothing ordinary about

our present scheme of things. For the dawn of the new century will fortuitously coincide with a period of great change and transformation in 1

The Strategic Perspective I deal first with the strategic perspective that informs this presentation. One hundred years hence, when economic historians come to

review our times, they will no doubt be

the environment within which we conduct our

interested in how we viewed our present circumstances and have now conceive of the

economic affairs that will be sufficiently different

way ahead.

and huge to ensure that the years immediately ahead of us will constitute a transition from one era to another.

It will have to be reported that Barbados came to the end of the twentieth century

exemplifying remarkable economic and social features.

These major changes that will bring about the transition will involve the coming into

This nation will come to the end of this

existence of new arrangements for a Caribbean

century enjoying the highest index of human development of all developing countries. The

Single Market and Economy, and sweeping

rhanpps in the trade and financial conditions

end of this century will also find Barbados with

nnHpr which nations such as ours participate in

the lowest index of poverty to be found among all nations in the developing world.

the global society.

In many respects, we have already been

caught up in that transition. It now remains for us to fully understand the dimensions of the

For developing countries, therefore the twentieth century has been the Barbadian century.

economic and societal changes that we must

engineer during this period of transition to realise our objective of keeping our nation on a sustainable development path.

These

are

fantastic

and

priceless

achievements of which every Barbadian can be

justly proud. But they have also established an awesome legacy to live up to and upon which we now must build.

This presentation, as will the others to follow during the second term of this administration, is based on the premise that the

five years between 1999 and the year 2004 will represent a unique transition period in which

Fromsuch an auspicious beginning in nation building, it is not vainglorious for us now to reach forhigher economic and social attainment,

adjustments will have to be made to reposition

especially in circumstances wherethechallenges

our national economy in a radically different regional and global economy.

that will confront us offer a society such as ours

more opportunities than hindrances.

I begin therefore by offering this House a strategic perspective on the way immediately ahead of us.

In the next five years, Sir, a deliberate, carefully focused and creatively implemented strategy will have to be carried out to reposition

the Barbados economy in a new regional economy.

In 1973, the founding fathers of our regional integration movement conceived of only a limited form of economic integration for our region.

But in this era. Sir, when large developed economies are coming together to form huge trade blocs, when, day by day, massive companies are merging to become companies with annual turnovers many times that of our collective GDP in the Caribbean, we will surely tempt economic providence by acting out a charade that says that each of us, in our own cracking mould, can go it alone.

The survival and prosperity of the Caribbean economies, singly and collectively, require that we make a success of that commitment to create

a Single Market and a Single Economy in our region.

They conceived of the Caribbean economy as a variation of a common market, with

provision for the free trade in goods, and the erection of a common protectionist tariff to goods imported from outside the region, but with no provision for the unrestricted movement of capital, labour or the provision of services.

The

reconstitution

of

this

Caribbean

economy as a Single Market and a Single Economy will" therefore be the first great challenge that will face us in the new century.

It

will

entail.

Sir,

the removal of all

remaining tariff and non-tariff barriers to the movement of regional goods.

The Treaty of Chaguaramas, which called their vision of integration into existence, also did not provide Caribbean citizens with the rights to establish businesses in any part of their region, as they saw fit.

Each Caribbean economy has therefore since evolved with its structure and its functioning exhibiting the effects of the constraints to regional economic development that was imposed by that limited view of economic integration in 1973.

However, in 1989 at Grand Anse, Grenada,

the Heads ot" government of the region determined that the region should depart from the limited course of economic integration on which we embarked in 1973, and that the

It will require that where there was no provision in the past for the free movement of capital and people, these things should now become part of our new economic reality.

It will mean that each Caribbean citizen

must have the right to be able to establish companies in any Caribbean nation of his or her choice.

It

will mean

that

we

have

to walk in

harmony in the development of our industrial and agricultural sectors; harmonise our taxation systems, and our incentives; and support economic activity in our region with a regional transportation policy which addresses long standing deficiencies in the provision of air and

Caribbean economy should be constituted not as a limited common market, but now as a Single

sea transport.

Market and a Single Economy.

It will also mean that we will have to clearly define and follow rules to govern our economic relations with extra-regional countries, prescribe

I say, Sir, it was a bold vision, which, given this region's history of entrenched insularity,

rules to brin^ about free and fair competition

will be a difficult vision to achieve.

within our region and set up new mechanisms for settling economic disputes in the Caribbean.

The formation of a Single Market and Economy in the Caribbean will also mean that we will have to move in concert to develop our money and our capital markets, and to create an environment

within

which

transactions

involving the different national currencies can be made more easily. In addition by incrementally pursuing relatively similar economic policies

designed to create conditions of regional internal and external stability at some time in the future, like the countries of the OECS and the European Union, we will come to benefit from the

operation of a common Caribbean currency.

Mr. Speaker, the creation of such a Single Market and a Single Economy in the Caribbean is not a pipe dream.

The Prime Minister of Barbados has been

entrusted with the responsibility of bringing that Single Market and Single Economy into existence. Initially the provisions to facilitate the formation of the Single Market and Economy were intended to have been put in place by 1993. In 1996, after a Special Economic Consultation on the matter, a revised timetable

was set to have the main elements in place by

1999. I am pleased to be able to report to this Parliament that we are on schedule to meet that

the free movement of capital, the provision of services and the rights of establishments for Caribbean investors throughout our Region.

Protocol 111 elaborates a policy and framework for regional industrial development. While Protocol IV spells out the elements of our regional external trade policy. Protocol V covers agricultural development, while Protocol VI sets out the framework for the implementation of a new regional transportation policy.

To ensure, Mr. Speaker, that economic gains are fairly distributed and that the costs of participating in our regional economic

integration movement are minimised, recently Governments signed Protocol VII which lays out the set of policies to protect specially disadvantaged countries, regions and industries as the provisions of the Single Market take effect.

Recently,

Mr.

Speaker,

the

Inter-

Governmental Task Force was convened in Barbados to conclude a Protocol to set out the

rules to provide for fair competition within this region and another to settle upon a mechanism for the settlement of regional economic disputes.

These will be ready for signature when the Heads of Governments meet again in October of this year.

objective.

Our affairs in the Caribbean are governed by

did not make provision for a Single Market and a Single Economy, an Inter-Governmental Task

The arrangements have therefore been put in place such that the legal framework within which a Single Caribbean Market and Economy

Force was assembled to draw up for us protocols

will function will be in place by the year 2000.

the Treaty of Chaguaramas. Since that Treaty

by which to amend the Treaty to make the Single Market and Single Economy a legal reality.

To

date

Caribbean

Governments

have

signed seven of the nine protocols required to create the legal framework within which a Single Market and a Single Economy can be formed and function.

Obviously, being part of a wider Caribbean Single Market and Economy will affect the way in which the Barbadian economy functions and comes to be structured.

1am conscious, Mr. Speaker of the fact that there are still deeply entrenched insular and

protectionist sentiments at work in our land which hold that we should reserve our local

Protocol

1,

has

amended

the

voting

arrangements and the institutional organs of Caricom to support a single economy.

Protocol II has established a legal framework for

market for local producers only. 1am also aware that there are concerns that some of the

arrangements under which we do business in Barbados already put us at a disadvantage with

some Caribbean economies with which we will

now have to compete even more intensely.

I however wish to use today's occasion to urge every citizen, every Barbadian investor to see the new Caribbean Single Market and Economy not as a hindrance, but as a golden opportunity.

The citizens of this country have a long history of making it in countries all across the globe. In recent decades, companies like Simpsons and Goddards have risen from humble origins in Barbados to become powerful and successful enterprises even beyond our region. Recently, as well, we have created high quality export service industries that have shown themselves capable of thriving at the centre.of the international business arena.

A Caribbean Single Market and Economy will create a welcomed, broader space within which Barbadian enterprise can flourish, provides us with the benefit of a larger market, a wider range of investment options and possibilities, and the prospect of using that broader regional base as the foundation upon which we deal with matters concerning our participation in the extra-regional economy.

Changes will however have to be made to effectively and successfully provide for our integration into this new Caribbean economic dispensation. These changes will engage us in this presentation and those to come.

But I wish this House of Assembly, every Barbadian, and the entire Social Partnership of our nation to agree and to act upon the strategic objective of making our economy the most

competitive in the new Caribbean Single Market and Economy by the year 2005.

Mr. Speaker, the year 2005 will also be a year of great destiny in our international ^economic relations.

For decades, Barbados like other developing countries occupied a special niche in the

international economy. Our special status as a small developing economy provided us with access to concessional financing from international lending institutions. It also served as the point of leverage whereby we were able to negotiate special preferential trade arrangements with European and the North American economies. There was also the ready international acceptance of the view that we had to use tariffs and non-tariff barriers to protect our infant industries, and that we will be

discriminating in how we treat national capital, goods, services and enterprises vis- vis similar economic and financial transactions originating abroad.

This environment that afforded countries

like ourselves access to special, preferential and differentiated â&#x20AC;˘ trade,

economic and financial

relationships is now being dismantled, and we are faced with the prospiect that by the year 2005 we may have to function under entirely new arrangements.

To begin with. Sir, at the end of 1998, Barbados ceased to have access to World Bank

concessional loans. We are also now engaged in complex negotiations with Europe and the Americas which could possibly see , the replacement of the preferential access our goods formerly enjoyed to their markets by one in

which we phase in new reciprocal trade arrangements under which we get duty free access to their markets by giving them duty free access to ours. It is a tough new world.

Our international economic relations have

been made more complex by the coming into existence of the WTO which is applying new rules to international trade. Among them is the

requirement that countries should dismantle non-tariff barriers to trade; that trade in goods and services should be progressively liberalised, that non-discriminatory practices should apply to goods and services of domestic and foreign origin alike and that reciprocal trade arrangements meaning what I do to you, you should do to me should become the new order

of the day.

The WTO only offers special and differential treatment to those countries classed by the UN as the least developed, which generally do not include the Caribbean.

Our mission therefore. Sir, simply now must be to successfully reposition this Barbados economy in the new global economy such that it can thrive as a competitive and robust economy in all of its spheres.

The likelihood therefore is that with the

coming into effect of new WTO inspired rules,

This presentation of budgetary proposals,

the international economic environment within

with the others to follow in this term of this

which our immediate development will take

administration, will therefore be shaped by the

place will be more competitive and difficult than

perception that we have these six years to make

that of the past.

the transition to a new economic order, and that

transition must be made in an orderly and Indeed, Sir, the battle over the trade in

creative fashion.

bananas portends very much the character of our new international realities.

Macro-Economic Management Issues For our part, in April 1994, Barbados entered an arrangemenF with the WTO to put in

1 deal next. Sir, with our Macro-Economic

place new international trade arrangements by the year 2004, among which are to be the dismantling of non-tariff barriers to trade and their replacement with bound tariffs which are

Management

Issues,

achievements

of

only to be temporary.

with short term cyclical variations in the performance of our economy.

The point, Sir, is that changes in our trade relationship with Europe and the Americas and

these

Mr.

Speaker,

strategic

the

economic

objectives we have set for our nation will be put out of reach unless we continue to provide sound macro economic management to deal

It is to this that 1 now turn.

with the general elobal economy and under

WTO arrangements will come together by the

year 2005.

1 say to this House, Sir, therefore that the

period between now and then must be treated as a period of transition for this Barbadian economy, within which we make the necessary adjustments to be able to successfully compete in this more intensely competitive international economic environment.

Clearly, Mr. Speaker, it is better and easier to bat on an easy wicket than on a sticky one.

The 1998 Barbados Economic and Social

Report has been laid in Parliament and 1do not propose to tire the House with a recital of its essential facts.

Suffice it to say that it reflects an economy on a sound footing, having experienced six consecutive years of sturdy real economic

growth, with low inflation, a substantial reduction over the period of the unemployment rate from 23% to 11%, the containment of the

fiscal deficit to manageable proportions; a reduction in the debt service ratio from 24% to

about 8% and record levels of foreign reserves of But Barbados must face its future with confidence. The sectors which have driven this

economy in the past two decades are not those which have functioned under preferential trade

arrangements, likesugar, but those which from the outset have had to find their way in the international business arena without any special coddling.

over $700 million at this time.

It should also however frankly be noted that there are certain warning signs which have

emerged and which must not be allowed to take root to threateja nor reverse the gains of recent years.

These refer especially to the fall in our

foreign reserves by $11 million last year, the relatively slow build up in these reserves this year and the evidence of an element of excess

demand at work in our economy which unaddressed could lead to external instability.

None of th,e recent pressure on our foreign reserves has come from this source. In fact. Sir,

in September last year, in early recognition of the warning signals in our economy, early measures were instituted to reduce the deficit

below the target set at the start of the financial year despite the fact that I might even have had a general election in mind.

It is our judgement that the factor which

chiefly has induced these developments has been a very rapid increase in credit over the course of the last two years, especially to the non-financial private sector and for personal purposes.

I should however be quick to point out that the link between the growth in credit and foreign reserves outflow is not and has not been necessarily the only reason for our recent slow pace in foreign reserve accumulation.

The facts now show that the Government's

fiscal deficit has been reduced below its original ceiling, and that in fact, net domestic credit to Government has fallen from $682.7 million at the start of 1998 to $499.1 million at March 1999.

Our

statistics

however

also

show

that

between July 1998 and July 1999, credit to the non-financial private sector increased by over

under pressure by the significant investment

$400 million,-compared to an increase of $265.5 million between July 1997 and July 1998, due largely to a rise in personal disposable income and the rapid growth of activity in the

being made in this period in plant and

construction sector.

Our foreign reserves have also been put equipment for the tradeable sector which will

redound to the advantage of the Barbadian economy in the years ahead. Our external

position has also been affected by the sluggish performance of our exports and by the investments abroad of the higher profits

In response to this extraordinary increase in credit to the non-financial private sector, I accepted the advice of the Central Bank of Barbados to apply certain protective monetary policies; specifically an increase of one

accruing to financial sector companies as well as

percentage point in both the cash reserve and

to

the discount rate in July.

the

investment

abroad

of

the

National

Insurance Scheme.

In such a context it is important to introduce a mix of macro economic policy measures which will, by stimulating the export sectors in particular, assist us in consolidating the gains made over the past six years.

At the same time, provisional approval was granted for a further one and a half percentage point increase in the cash reserve ratio of commercial value, if warranted, after sufficient

time had elapsed to facilitate a review of the impact of the first round of protective monetary measures.

But however to protect our economic stability we also have to institute measures to deal with

the growth of credit.

Since the measures were introduced credit

creation has slowed somewhat.

Mr. Speaker, whenever this country has experienced balance of payment pressures in the past, those pressures have generally arisen from the excessive creation of domestic credit to meet

large

and

Government.

unsustainable

deficits

of

the

About $22

million in new credit per month has been advanced in each month since the measures

came into place as compared to the $36 million in new credit per month in the five-month period befoj'e the new monetary policies were put into effect.

I am therefore satisfied, Mr. Speaker, that the credit control measures of July are beginning

Government therefore acknowledges that it has, in terms of short term tactical management

to have the desired effect and that no further

issues, to institute measures to contain the

tightening should be pursued at this stage, especially since a one percentage point increase

growth of domestic demand, to create an environment within which productive activity which can boost or save foreign exchange can

in the cash reserves ratio of the commercial

banks, by depleting commercial bank reserves by $32 million, could put pressure on some banks at a time when the excess reserves of the

flourish,

and

we

must

also

restore

the

appropriate balance between traded and nontraded activities in this Barbadian economy.

banking system are low, amounting only to $45 million today.

These

The matter of the excessive growth of credit to the private sector will be kept under review.

If necessary, further protective monetary measures will be put in place but we will not

short

term

macro

economic

management matters will concern us even while we focus on the strategic objective of repositioning the Barbadian economy to cope with new regional and global economic forces.

revert to the selective credit controls and other

credit rationing devices which were in operation before the process of financial liberalisation was instituted in the early 1990's.

It is therefore. Sir, in such a context that I

turn next to the presentation of the Financial Statement so that this Parliament can better

Generally, Mr. Speaker, our recent economic

performance has pointed to the dangers of allowing this economy to expand at a rate faster

glean the financial parameters within which the management and development of our economy will take place.

than its sustainable rate of growth.

With population growing at less than 1% per annum, we can realise our objectives to create

The Financial Statement

new jobs and support a higher standard of living for our people by sustaining a growth rate

The performance of Government's finances for the financial year ending March 31, 1999 turned out to be stronger than was initially

at about 3% per year.

projected because of the buoyancy of the In 1998, our economy grew at 4.4%, well above the sustainable rate of growth. We have set in train the measures to put ourselves back

on a sustainable growth path, and it is projected therefore that this year and in the years immediately ahead, our economy will continue to grow at a rate of about 3% per year.

I say also that, Mr. Speaker, in creating the conditions for our economy to grow at that rate, we also have to pay special attention to the sectors which are generating the growth.

economy in 1998, and as a result of a major fiscal policy adjustment made in September of that year.

Our fiscal policy for the financial year 1998-99 was initially formulated to achieve a deficit not exceeding 2.6% of Gross Domestic Product. With this objective in mind. Parliament on March 20,1998 approved a fiscal programme

that projected current revenue of $1,540million, current expenditure of $1,537.8 million and capital expenditure of $325.2 million to produce a fiscal deficit of $323 million.

In this respect, the facts are that in the past 18 months the sectors of the economy which

In addition to the expenditure which was

earn foreign exchange have been growing at a

approved by Parliament on March 20, 1998, supplementary provisions of$101.4 millionwere approved during the course of the year.

slower rate than those which consume foreign exchange.

I;

.::-y

It

wUl however be

recalled,

that

in

September 1998 it was decided to limit capital expenditure to $280 million rather than $325 million that Parliament approved as a means of averting over-stimulation of the economy. This fiscal measure was intended to reduce the

projected deficit from 2.6% to 1.5% of GDP.

IncomeTax, the other major tax in this category, and recorded a 13.1% increase against a 8.4% increase for the latter.

Revenue from taxes on goods and services however increased marginally by $25 million or 3.5% to $748 million compared with the robust 48% growth of $234.5 million recorded for the previous financial year. This slow down in

The financial outturn for the fiscal year 1998-99 was as follows:

growth in taxes on goods and services can be attributed to the effects of the zero rating of a basket of basic food items in October 1997.

- $1,555.4m

During the last financial year VATreceipts grew

Current Expenditure

- $1,561.2m

by a mere $3 million, to reach $454.9 million, while Excise Tax increased by $22.8 million to

Capital Expenditure

-$

257.4m

reach $189.2 million.

Overall Deficit

-$

263.2m

Current Revenue

The growth in taxes on international trade was $136.9 million, that is 7.0% or $9 million

rather than $323 million that Parliament said we

higher than in the previous year.

could have incurred at the start of the frnancial year.

When the deficit is calculated on the basis

used by International Financial Institutions, it amounts to $45 million or 1.1% of GDP, well within the initial limit of 2.6% of GDP, and the

Property taxes in 1998 increased marginally by $5.2 million reversing the decline which was experienced in the previous period when those taxes fell by $3.4 million.

revised limit set in September of 1.5%.

Current Expenditure 1998/99 Current Revenue 1998-99

The current revenue for the fiscal year ended March 31, 1999 was projected to amount

On the expenditure side.

Current Expenditure for the fiscal year recorded a 7.9% increase or in dollar terms $114.1 million, to total $1,561.2 million.

to $1,540 million. The actual amount realised for

the period was however $1,555.4 million, which was $15.4 million greater than projections and $97.1 million greater.than the previous financial year. This increase was due entirely to the performance of the tax revenue which recorded an additional $98.5 million to reach $1,485.1 million. On the other hand, non-tax revenue

The main contributor to the increase was

debt repayment which rose by $35.1 million to move from $196.8 million to $231.9 million.

Repayment of domestic debt increased by $48 million as opposed to the external debt repayment which fell by $12.9 million.

declined marginally by $1.4 million from $71 million in 1997/98 to $70.3 million in 1998/99.

Interest payments for the period rose by $17.5 million, a $8.7 million increase. Domestic

Tax revenues for the financial year just ended recorded increases in all categories. Taxes on incomes and profits grew by $40.6 million to $459.9 million. Growth in the receipts of Corporation Tax was stronger than that for

interest costs accounted for 77.8% of the total

interest payments and increased from $162.4 million to $170.3 million. Foreign interest payments rose by $9.6 million or 24.6% from $39 million in 1997/98 to $48.6 million.

Expenditure on salaries and wages rose by

Domestic Debt

$25.9 million or by 5.3% to reach $516.5 million for the financial year. This level of increase was due largely to the 3.2% wages and salaries

Treasury Bills

increase in the public sector in the last financial

Borrowing from the

$

575.8 m

Central Bank

years.

Ways & Means Account

0.0 m

Current transfers grew by $23.4 million for

the period which was significantly less than the

Debentures

$1,452.3 m

Local Loans

$

9.1 m

Saving Bonds

$

84.3 m

Tax Refund Certificates

$

1.3 m

Tax Reserve Certificates

$

0.3 m

$69.1 million increase recorded in the previous

financial year. The major contributors to that increase were the Transport Board which received funds mainly to pay off debt, and $18 million to the University of the West Indies in

respect of arrears and to pay for increased in take of students.

Capital Expenditure 1998/99

As regards our

Capital Expenditure in the last financial year and lending remained virtually at the same level

Foreign Debt

of $257.4 million as it was in 1997/98, with all

the categories remaining at the same level of expenditure.

Deficit Financing 1998/99

source

of

financing

were

673.6 m

Foreign Bonds

$

229.6 m

Loans from International Financial Institutions

$

417.0 m

Foreign Commercial Banks $

13.0 m

Loans from

The 1998/99 fiscal year was the third consecutive year that the international capital market was not a source of funding for our fiscal deficit. Capital inflows of $43.5 million were received from foreign sources to assist in the financing of the capital projects. Once again the main

$

domestic

Treasury Notes and Debentures.

Loans from Government &

Governmental Agencies

$

14.0 m

Public Finance 1999-2000

In relation to present financial year, the National Debt

As regards to our National Debt, at March 31, 1999 our National Debt stood at $2,796.7

million up from $2,764.2 million the previous year, a 1.2% increase over the period ended March 31, 1998. Domestic debt grew by 2.1%

and foreign debt declined by 1.8%. The details of the domestic and foreign debt at March 31, 1999 which I must present to this House as

required by the Constitution were as follows;

1999-2000 Estimates of Revenue & Expenditure

approved by Parliament in March this year were formulated within the context of a fiscal deficit

not exceeding 1.5% of GDP.

Those Estimates projected total current revenue

of

$1,630

million,

total

current

expenditure of $1,657.6 million and capital expenditure of $318.5 million giving an overall fiscal deficit of $346.1 million.

At the end of the first quarter of the year, the financial performance was basically consistent with projections in spite of a slight

Overall, the'trends also point to stability in

decline in the revenue from the VAT. This was

Government's financial position, and suggest that the fiscal policy, having at its centre a smaller fiscal deficit, is well on the way to being

due in part because increases in the revenue

successfully achieved.

from taxes on incomes and profits compensated for the decline in the receipts from the VAT.

In the prevailing financial and economic climate,

Current revenue was projected to amount to $352.1 million whereas $349.4 million was

it

discipline

is

by

essential

that such financial

Government,

which

has

realised, just $2.7 million short of the target.

contributed so substantially to the general stability of the economy, be maintained and

When compared with the first quarter of the previous year 1997/98, there was a marginal $2.6

carried with us into the future.

million increase.

Revenue from taxes on incomes and profits for the quarter yielded $110.8 million, $4.6 million more than was projected and $10.8

million more than receipts for the same period last year. The revenue from taxes on property and from import duties was basically on target for the quarter and showed marginal increased

Policy Objectives I turn next to the specific policy objectives of the measures which I shall so announce to the

House. In the prevailing climate of fiscal stability, appropriate measures can now be taken to consolidate our recent economic gains,

but more especially so to better prepare this

receipts for the previous financial years.

economy to deal with the challenges which will

On the other hand tax receipts on goods and services were below projections and last year's

As such, the overriding concern of the measures shortly to be announced is to assist in preparing the productive sectors of the Barbados economy to compete successfully in the Caricom Single Market and Economy and the emerging global

performance by $17.5 million and $11.1 million respectively. This was principally as a result of

a decline in the revenue from the VAT. During the first quarter of the financial year revenue from the VAT amounted to $97.2 million as

compared with a projected $112.3 million and

$108.7 million realised in the previous financial year.

On the expenditure side, Sir, total expenditure for the first quarter amounted to $375 million which was $35.9 million less than

the $410.9 million spent by Government in the same period in the previous financial year. It was also only $2.7 million, or 1% in excess of the expenditure projected for the first quarter.

be ushered in at the turn of this new century.

economy.

Our strategy for repositioning our economy in Caricom and in the global economy acknowledges to begin with that we have ruled out the use of exchange rate variation as a tool

of competition, and that our wage rates are generally higher than those of our immediate competitors,

Barbados will therefore begin the manoeuvre to reposition itself to become more competitive in Caricom and globally from the position of

being a relatively high-cost producer of goods Capital expenditure for the first quarter amounted to $41.2 million, an amount that was

marginally below the $43.8 million recorded in

the corresponding financial year. The trends say that this data indicate a serious effort by Government to keep its spending in check.

and services which has ruled out devaluation as

the means by which to correct cost distortions in its economy.

Operating under a fixed exchange rate system such as we have, we will maintain our competitive edge only if we ensure that the

transaction costs of doing business here are not

higher and do not rise at a faster rate than those of our main competitors.

The implication is that to secure the competitive position of our economy which we seek; we have to systematically dismantle all of the

encumbrances

of

doing

business

in

into force, we would, have successfully prepared this economy for any eventuality.

I must especially stress that the removal of the many encumbrances to doing business, many of which have to do with procedures in the public sector which lead to delays and distortions of private investments and to

Barbados, remove all the factors which deter or

increased

distort investment decisions and ensure that our

systematically tackled.

producers have access to inputs ahd resources on terms and at costs that are at least as favourable as those available to their competitors.

We also have especially to ensure that there is a climate conducive to sustained investment

by the private sector to allow it to recapitalise,

transaction

costs,

must

be

The evidence is clear that practices at the Port, at the Customs, at the Corporate Registry, in the Town Planning Department, in the

Immigration Department, among others, more often seem not designed to facilitate the smooth, orderly and cost effective taking and

implementation of investment decisions. Some

refurbish and retool much of our productive

business practices in the private sector too leave

capacity, and to support private expenditure on

much to be desired and are not conducive to the creation of a climate of competitiveness.

productivity boosting measures,

research,

market development, training and retraining and the introduction of new and improved information technology.

I therefore propose to support the other measures to be introduced this evening and in

the future by the creation of a Commission on Competitiveness.

There is also no doubt that the provision of special incentives and supports to our

productive sectors will and must continue to be of crucial importance in the development of a new competitive Barbadian economy. We will however now

have

to

ensure that such

incentives and supports are consistent with our

WTO obligations and are in harmony with the provisions of the Caricom Single Market and Single Economy.

Ministry of Economic Affairs.

It will function to ensure that the best

practices by public sector agencies conducive to investment facilitation and improved national

competitiveness are followed by public sector agencies, and that the mass of red tape that has held back the realisation of so much of our

Many of the measures to be used to make the Barbadian economy truly competitive in Caricom and in the global economy will have

fiscal implications which cannot be borne all in

one year. Others will evolve and will have to be made responsive to future regional and international developments which cannot be properly guaged at this time.

Government,

I will chair it in my capacity as Minister of Economic Affairs and it will be serviced by the

in

such

circumstances

therefore proposes to speak to these matters

each year to ensure thatby the year 2005, when most of the changes that will affectus will come

economic potential is removed on a systematic basis.

It will also, Mr. Speaker, exercise oversight

over the implementation of the provisions of the Single Market and Economy as they affect the Barbadian economy, and pay special attention to

matters pertaining to the diffusion of improved information technology through this economy as a factor in inducing improved competitiveness.

The Commission will receive and act upon

representations from the public and will be

required to make frequent reports to Parliament on its work in this most crucial matter.

Economic and Financial Measures I turn now specifically to our economic and financial measures.

58.020 cents and 16.584 cents respectively. It should be noted that for commercial enterprises the VAT is refundable and in effect the price of the product for enterprises was effectively reduced by the amount of the VAT.

In March 1998, subsequent to the closure of the Mobil refinery. Government took the

opportunity to review energy prices. It totally Energy Prices

Dealing first of all with energy prices. It is

clear, Mr. Speaker, the sphere of energy prices is an area in which Barbadian producers stand at a disadvantage to regional competitors.

eliminated the excise tax on fuel oil and

kerosene. The tax on gasoline was reduced to 83.9 cents per litre and on transport diesel to

64.60 cents per litre. The retail price of gasoline therefore went down to $1.44 per litre and automotive diesel to $1.25 per litre. In January of this year, as a result of world market price

A new regime therefore has to be put in

changes, the price of gasoline went down to

place to remove this disability. Our disability

$1.34 and automotive diesel to $1.20 per litre.

But the January decreases mainly passed on to

arises from the fact that the level of taxation on energy products in Barbados is far in excess of

the rates charged by other Caricom countries.

the public the benefit of the reduction in the price of crude oil - the level of taxation on those

products remained unchanged.

The new energy pricing regime that we propose to introduce is one under which the

level of taxation on energy products will, by progressive steps be reduced, to bring them in line with the Caribbean median. Variations in

the crude oil prices, which are beyond our control and which affect all regional producers in the same manner, obviously will have to be passed on.

The prices for energy products however remain substantially higher than most of our competitors in the region. It should be noted'

that the cost of producing the products is about the same for all islands, the main difference is in

the level of taxation. For example, the.total tax on gasoline per litre is now 82.6 cents in Barbados, 44.6 cents in Trinidad, 38 cents in

The unfortunate facts are that in the past,

Jamaica, 39.6 cents in St. Lucia and 57.1 cents in

energy products have been used as a main

St. Vincent. For diesel it is 72 cents per litre in

source of tax revenue. As such, the consumption tax on gasoline which stood at 50

Jamaica, 43.4 cents in St. Lucia and 33.5 cents in

cents per litre in 1986 was, by 1993, raised to

St. Vincent.

Barbados, Trinidad it is 12.8 cents, 32.0 cents in

89.581 cents per litre.

As I have indicated. Sir, we therefore intend

During the same period, the tax on diesel was increased from 43.6 cents to 74.8 cents, and

that on fuel oil, which is used mainly in the

to bring the levelof taxation on energy products in Barbados in line with the rest of the region in the shortest possible time. In light of the

production of electricity, was increased from 4.6

magnitude of the differences in the level of taxes

cents to 9.6 cents.

which I have just demonstrated, it is not feasible for the full adjustments to be made in the course

January 1997 saw the consumption tax for

of a year. In addition, our priority, Mr. Speaker, has to be to pass on the benefits of significant

gasoline resolved into an excise tax of 69.49

reductions in taxes to the productive sectors of

The introduction of the Value Added Tax in

cents per litre for gasoline and a VAT of 20.087

the econoifly, including trucking and public

cents per litre; for automotive diesel it was

transportation.

Mr. Speaker, we have, for sometime now, been harbouring a false distinction between

fact that crude oil prides are far higher than they were then.

automotive and industrial diesels. There is no

difference. Sir, in the technical specifications of the diesel fuels being sold locally. Consequently, there will now be a single price for diesel fuel in

The revenue loss is approximately $8.5

million per year or $4.3 million for the remainder of the fiscal year.

Barbados.

I propose now to reduce the excise tax on diesel from 56.18 cents per litre to 34.62 cents

per litre. Bringing our tax on this product in line with that obtaining generally in the region. The retail price will now be reduced from $1.20 per litre to $1.00 per litre. Manufacturers and other

registered users will continue to benefitfrom the

These changes to the excise tax on gasoline and diesel together with the new retail prices will come into effect on September 1, 1999.

In the years ahead, Mr. Speaker, we will reduce the level of the tax on gasoline until it reaches the regional average.

tax concessions on their inputs. The revenue

Finally, on the matter of energy pricing, the

loss is expected to be approximately $6 million per year or $3 million for the remainder of this

information available to us indicates that energy

year.

In January of this year, crude oil prices fell to US$8 per barrel. The retail price of gasoline was reduced from $1.44 per litre to $1.34 per

litre, to pass on to the public the full benefit of this fall in crude prices.

Since then the price of crude oil has increased from US$8 per barrel to US$18.50 per barrel, an amount equivalent to a 14 cents increase in the cost per litre of gasoline.

It is not possible, Mr. Speaker, for the Government to absorb all of this increase by a

corresponding reduction in the excise tax by an equivalent amount.

I propose to reduce the excise tax on

gasoline from its present level of 65.118 cents per litre to 56.824 cents per litre.

In effect, the Government will absorb almost 10 cents of the 14 cents increase in the price of

gasoline which has arisen from the increase in crude oil prices, by way of a reduction in the tax on the product and pass on only5 cents per litre to the public.

Theprice of gasoline will now move to$1.39

per litre, still lower than the $1.44 per litre where it was at the start of the year despite the

products being imported from Trinidad and Tobago at prices far in excess of the prices at which similar products can be landed in Barbados from competing destinations.

This matter has been referred

to

the

attention of the Trinidadian suppliers.

To protect the competitive position of the Barbadian economy> we will, in addition to reducing our domestic taxes on the products, ensure that Barbados sources energy products

from the cheapest and the most reliable producers.

Agriculture and Fisheries

I deal next with agriculture which is another sector whose functioning is likely to be

adversely affected by new international trade arrangements.

In anticipation of this, last year I indicated that Government proposed to establish an Aericultural Development Trust to dispense concessional financing as well as funding for technical assistance to our farming community.

During

the

past

year,

extensive

consultations were held with a wide cross

section of persons involved in the agricultural sector and I am pleased to report that the concept of the Agricultural Development Trust 13

â&#x20AC;˘If

-JS^

has received strong endorsement. As a result of those consultations, a committee was established to make recommendations on the manner in which the Trust should function and the various

ways in which it could be used to provide financial support to the agricultural and fishing industries. The work of this group is almost completed and I expect the Trust to become a reality by the start of the next fiscal year.

iii) provide incentives which will create a climate in which farmers through improved performance' can become more competitive.

I now therefore propose to provide the following incentives to the agricultural sector: (1) A grant of 50% of the cost of spraying

equipment up to a maximum of At present, there are a number of agricultural items which are subject to licences

$800.00.

and as is the case with the industrial sector,

(2) A grant of 50% of the cost of

those licences will remain in place until March

establishing an approved irrigation

system including provision for a water

31, 2000.

reservoir to a maximum of $60 000 for

When we remove those licences oh April 1, 2000, as part of our obligation to the WTO, we will put in place on those goods the tariff rates within the limits which we agreed to when we acceded to the WTO Agreement.

each individual farmer.

(3) A grant of 60% of the cost of establishing an approved irrigation system including provision for a water reservoir to a maximum of $72 000 where two or more' farmers are

We are now finalizing those rates, taking into account not only our need to provide

prepared to share common facilities or

protection for the agricultural industry but also

farmers' association.

for active members of a registered

the need to control the cost of living.

(4) A grant of $500.00 per hectare or 30% In the meantime, we have taken the

opportunity to review the existing incentives provisions on agriculture and fisheries to identify new incentives to assist the sector in becomingmore competitivein the local, regional and

international

markets.

These

will

be

incorporated into the structure of the Development Trust when it comes into operation.

The Ministry of Agriculture in reviewing the current incentives programme sought to do the

of the cost whichever is less, for

establishing an approved pasture.

(5) A rebate of 18% of the price of machinery used in agriculture and agro-processing (excluding sugar cane harvesters).

(6) A rebate of 50% for the components of an approved tunnel ventilation system for poultry houses to a maximum of $15,000.00 per holding.

following

(7) Prices support incentives for cotton

i)

ii)

14

iiilSSCi

harvesters

including

a

40

cents

identify those incentives which proved helpful in the past and have relevance to present and future agriculture;

incremental increase per pound of

identify new incentives to encourage farmers to use new technology in their

It is anticipated that these incentives will cost the Treasury in excess of $2.0 million if fully

cotton harvested.

management and production systems

utilized. ThS list of incentives is set out at

to make their businesses more efficient;

Appendix II.

Asa means of meeting the cost of these and other incentives, as well as providing some of the funds to assist in the setting up of the

Agricultural Development Trust, the Common

External Tariff rates of 40% will be applied to

both imported lamb and beef effective as soon

rated supplies including insulated boxes for storing and transporting fish.

The criteria for approved fishery enterprises to benefit from the provisions are set out at

Appendix IV ofthis presentation.

as the CARICOM Secretariat is notified.

Currently the duty on imported lamb is 0% and is destroying our sheep industry while that on beef is 30% which is below the rate that we can set under the Common External Tariff.

I have also decided to extend some new

concessions to the fishing industry. At present a number of items used in the fishing industry

are zero-rated under the VAT Act. Certain of those items are also free of Import Duty but others are not. The existence of two different lists hascreated some confusion for the industry

in the past. Therefore, to remove that problem,

I have decided to have one list for both VAT and Customs Duty and toadd a number ofnew items tobothlists. The complete list isassetout at Appendbc HI. It includes;

(1) Stoves, sinks and other galley fittings specifically for marine use;

(2) marine grade pljrwood and hardwoods suitable for boat construction;

Manufacturing Sector

During the last six years the Manufacturing Sector in Barbados has recorded positive

growth. The sector provides employment for approximately 10,000Barbadians, the majority of whom Eire women, and contributes $200 million

annually to the Gross Domestic Product. The

Government remains strongly committed tothis sector and conceives of it as growing in importance as a generator ofjobs and incomes.

In both my 1997 and 1998 budgetary

presentations, emphasis was placed on improving competitiveness and efficiency,

within the sector. Measures were therefore introduced in those budgetary presentations

primarily to encourage manufacturers to begin

the process of restructuring of their production systems so as to be able to compete internationally. In particular, a special funding of $1 million per year for each year for technical

assistance has been provided to further reduce the cost of production incompanies, to improve

plotting

product and package design and to assist with

(4) fish saws and blades, waterproof aprons and other specialised goods for

benefit from the generous duty concessions and

(3) navigation

charts

and

instruments;

handling fish.

In addition, in order to extend the coverage

of the concessions to the fishing industry.

Section 7(1) of the First Schedule of the VAT Act which deals with eligibility for zero-rated

supplies, is being amended to read "a supply of approved products for use in a commercial fishery where the user is certified by the Minister responsible for fisheries to be engaged inan approved fishery enterprise".

As a result, fish vendors and distributors in addition to fishermen will be eligible for zero-

ISO 9000 certification.

Small manufacturers also now stand to

other incentives contained in theSmall Business

Development Act which was laid in Parliament today.

The sector will also benefit from our new

energy pricing arrangements and from changes to the property tax which I shall announce later today.

Government however recognises that the

manufacturing sector is far more exposed to the ill effects of the new regional and international

trading arrangements than any other sector of this Barbados' economy.

15

For example, in this year, the level of protection enjoyed by domestic producers against regional and extra regional competition

and replaced with tariffs (a process known as tariffication), in order that we may fully meet our WTO obligations.

was reduced as a result of the reduction of the

highest rate of import duty to 20%, in keeping

In keeping with those 1994 commitments

with our regional obligations under the CET, the

and

phasing down of the surtax on extra-regional

Manufacturing Association and other private

imports to 35% and the removal of licences on regionally produced soft drinks.

sector agencies, it is the Government's intention

We will continue to provide financial and other incentives to help the sector retool, to

reduce its costs, and to lift its profitability and

after

discussions

with

the

Barbados

to begin the process of removing licences on extra-regional imports from April 1, 2000 and applying tariffs on the basis of the schedule which

we

submitted

to

the

World

Trade

Organisation at the time of our accession.

standards.

We also commit ourselves to ensuring that

the sector is afforded every inch of protection available, having regard to the regional and

The application of such tariffs will not only permit us to begin to meet our obligations to the WTO, but will continue to provide some measure of protection and comfort to our

international trade agreements into which we

sensitive industries in the sector as is done in

have entered, especially the WTO agreement.

other countries, both developing and developed.

The particular items involving extra regioiral

Four years after signing the WTO agreement, there is still not enough awareness and understanding about WTO requirements and their possible impact on trade and

April 1, but subject to tariffs as prescribed in the

imports which would be free of licences from

production.

agreement of 1994 are as follows: Heading No.

Description of Goods % Bound rate of To be paid as at April 1, 2000

At the time of accession, each WTO member

was obliged to submit schedules which set out

the tariffs to be applied in terms of ceiling bindings at the commencement of the ten-year

Soya bean oil and its fractions, whether or not refined, but not

transition period for implementation of the WTO agreement, which commence in 1995. The

chemically modified

schedule

Sausages and similar products of meats,

outlines

the

terms

under

which

imported goods from extra-regional sources may be permitted entry into the domestic market of each WTO member country. Barbados made its submission on April 15, 1994.

meat offal or blood,

food preparations based on these products.

(This category will be differentiated to exclude

Barbados, as a member of the World Trade

those types of sausages which are not produced locally)

Organisation, is also required, as part of the trade liberalisation process, to remove its

Other prepared or preserved

technical and non-tariff barriers to trade. In this

meats, meat offal or blood

regard, by 2004 with few exceptions, namely those items which impact upon security, all the licensing procedures, which presently offer protection to the manufacturing sector under the 15th April 1994 Agreement will be removed

(excluding corned beef)

213%

Uncooked pasta not stuffed or otherwise prepared

(macaroni, spaghetti)to protect local producers

100%

Heading No.

Description of Goods

% Bound rate of To be paid as at April 1, 2000

3402.203

Other detergents, particularly

3402.902

powdered laundry detergents imported from outside the region

as a major sector of growth and development in Barbados. The rapid expansion of the sector in the 1980's and 1990's was mainly through data entry, medical claims processing and similar activities.

Today, significant changes in technology have eroded the market opportunities which we were previously able to exploit. This has manifested itself in some job losses in the sector.

to protect our manu facturers when we remove the licences

We have, on the other hand, witnessed an 6109.101

T-Shirts made of cotton

6109.901

T-Shirts made of other

textile material imported from outside the region

These are in compliance with our obligations as agreed to on 15 April 1994. It is important to note that the above rates will not remain at the

same level but must be reduced each year to

explosion in the level of interest and investment in software development and related higher value-added aspects of the sector. Such is the level of activity in the software development sub-sector that on present trend, Barbados will face a severe shortage of programmers in the not too distant future.

The Government is fully committed to the

provision of training so as to facilitate the fullest

reach the minimum ceiling fixed in 2004. This means that those bound rates will be reduced by

possible growth of this industry. We are

33'/3% by 2004.

supportive of the plan of the University of the

However, in accordance with our Caricom

West Indies to establish the School of International Services which will include a

obligations, we will have to seek permission

software development institute. This is expected

from

however to come on stream in the year 2000.

the Council for Trade and Economic

Development (COTED) for a suspension of the Common

External

Tariff

(GET)

and

the

replacement of the bound rates of duty on the

However, the demand for programmers is

These measures will enable us to protect our most sensitive areas of manufacturing

so heavy and so immediate, both from companies already in operation as well as from potential investors, that the Government will immediately embark on a training initiative

production when we remove licences in a

which will alleviate the local

manner that is consistent with both our WTO

and Caricom obligations.

software development skills and reduce the need to import these skills.

It provides a breathing space only. In the space, all concerned with the sector's operation

I propose to allocate $0.5 million in support of this initiative for practical, leading edge,

must redouble the effort to fund and devise

industry focused training in these areas. The programme will be implemented by the

above items as I have specified.

industrial solutions to industrial problems in the

shortage of

knowledge that the old devices of tariffand nontariff barriers will effectively come to an end in

Barbados Industrial Development Corporation

the years after 2005.

industry.

Information Services Sector

(BIDC) and in collaboration partners in the This measure will ensure that there is no

loss of momentum in the sector whilst the long

Mr. Speaker, over the past decade the informatics industry has been firmly established

term training plans of the UWI are being developed.

During the 1980's Barbados took a fresh look

health services and cultural servicesespecially in the areas of music and film. We expect that these services will meet our principal needs of

the international

International Business and Financial Services

at

financial

generating employment for a wide cross section

services sector and implemented a series of

business

and

of Barbadians as well as earning foreign

legislative initiatives that resulted in the development of the sector as it is now

currency.

constituted.

The sector has evolved depending heavily on the Canadian market and we propose to launch major promotional and development initiatives to change this situation. For example,

We however recognise that there are

significant challenges ahead. At every turn the industrialised countries are looking unfavourably at countries considered to be "off shore financial centres". One of the most serious

challenges lies in a report published in 1998 by the Organisation of Economic Cooperation and

we recently concluded a double taxation agreement with Cuba and it is our intention to

conclude similar agreements with countries in Latin America and Eastern Europe.

Development (OECD) entitled "Harmful Tax Competition - An Emerging Global Issue". This report in effect challenges the sovereign right of states to determine fiscal policy, including tax

Additionally, Government in association with the private sector, embark on a new marketing campaign in Latin America in an effort to attract business from those growing

rates and indeed whether taxes should be

economies

imposed on any item of income. This report focuses on services generally and more especially on financial services.

The Barbados Government has taken this

In addition to product development, at the forefront of our considerations is our policy of ensuring that supervisory and regulatory practices

in

Barbados

meet

international

matter with upmost seriousness and has

standards. In 1998 amendments were made to

determined that it was in this country's interest

the insurance legislation to achieve this objective and amendments are currently being made to the Offshore Banking Act. The International

to engage the OECD on the issue.

Barbados will however continue to expand

Business Companies Act itself, as well as its

its ability to provide international financial

administration, are also under review. Barbados

services. We wish especially to diversify the range of services which we export. We have already recognised the importance of information technology and electronic commerce. In this regard we have already established a policy committee that will address Barbados future competence to deal with this rapidly evolving area by determining the legal and regulatory framework that will allow

has further enacted anti-money laundering legislation which provides for the establishment

of an anti-money laundering authority.

In order to meet the additional commitments

to the development of the services sector we have agreed to the restructuring of the International Business Division of the Ministry of Industry and International Business and to

electronic commerce to flourish in this land.

recast it as Barbados International Business

Indeed the delivery of services through ECommerce will be one of the most important features of service delivery in the future.

Agency. In order to meet the cost of restructuring we will allocate an additional

We will therefore embark upon a programme over the next year to determine the feasibility of expanding our services provided internationally to include educational services,

$1

million

to

this

sector.

Out

of

this

restructuring we expect to see the development and implementation of strategies for: higher supervisory regulatory standards

and

greater efficiency new services and products; and increased

and

diversified

development of attraction facilities which emphasise our natural, historical, and cultural heritage, and incentives to encourage companies in the industry to emphasise marketing and training.

marketing and promotion.

Financing for refurbishment and upgrading Tourism

has been increasingly important in recent years.

For several years tourism has been the dominant industry in Barbados, and it has been

Companies in the accommodation sub-sector have been finding it very difficult to obtain financing on attractive terms and conditions.

Firstly, the duration of loans has tended to be

identified to be at the centre of the efforts to

transform Barbados into a high quality export service economy.

The emergence and growth of tourism was facilitated by the provision of various fiscal incentives by Government, where the intention was to stimulate investment in the sector.

no more than seven or eight years and then only in exceptional circumstances. Secondly, the cost of financing has generally been too high.

The

small

hotel

sub-sector

has

been

particularly affected as a result of the difficulties in obtaining financing on attractive terms and conditions. Small' accommodation properties

The major piece of legislation which specifically targets the tourism industry is the Hotel Aids Act, but this legislation dates back to 1956. Even though the Act was consolidated and

account for 40% of the total number of rooms in

revised

be developed to meet their needs.

in

1985,

its

provisions

are

not

the tourism industry, but if these properties are

to have any chance of remaining viable in the long-term then special financing incentives must

significantly different from those of the 1956 legislation. As the Act currently stands, incentives in the form of income tax relief and

In addition, Barbados currently has very few

duty-free concessions on imports of building

large hotel properties which could potentially

materials and other items are available to those

attract the attention of some of the larger

who qualify for benefits under the Act.

international chains. Also in light of the virtual unavailability of land on the coast for development, encouragement should be provided to stimulate development in non-

Apart from the Hotel Aids Act, other incentives to the tourism industry are provided for under the Special Development Areas Act (1996-21) and under the Hotel Refurbishment

coastal areas.

Establishment of additional attractions which

Programme.

Although the existing incentives, particularly the Hotel Aids Act, have stimulated investment

activity and the Hotel Refurbishment Programme has facilitated the replacement of key supplies and pieces of equipment, there are

emphasise our natural, our historical, and our cultural heritage is one way by which we can enhance our tourism product. It is therefore important to provide incentives and assistance for these types of ventures.

several other areas of importance to the

In the areas of marketing and training

operation of the sector that need to be

enough is not being done. It is imperative that

addressed.

hoteliers are encouraged to

These

include

financing

for

refurbishment and upgrading, consolidation in the small hotel sub-sector, encouragement for construction of large properties and properties in non-coastal areas, encouragement for the

become more

involved in the marketing and training of the island's tourism product and that hoteliers and restaurateurs get assistance for training for their staff.

In the past nine months the sector has

Establisliment of a fund to provide

performed somewhat sluggishly, suggesting that

loans at concessionary interest rates for the refurbishment and upgrading of

now is an opportune time for us to deal with matters pertaining to the cyclical performance of

accommodation properties with less

its industry within the context of strategic long

than

term objectives.

refurbishment

75

rooms

and

and

for

upgrading

the

or

construction of facilities to be used for

The range of activities which now constitute our Hospitality Sector are such that they cannot be provided for under the existing Hotel Aids Act.

the purpose of carrying on a business in the area of our natural, historical

and cultural heritage. This Fund will be established in the first instance by moving $30 million from the Industrial

Equally, the financial and operational features of the modern industry were not anticipated by the 1956 nor 1985 legislation.

Our hospitality industry has therefore outgrown its legislative and its incentive clothing.

Credit Fund to the Enterprise Growth Fund to be used entirely for this purpose;

Accelerated

write-off of interest on

loans up to $7.5 million where the loan proceeds are used to refurbish and upgrade accommodation facilities;

Accordingly we will now put in place a package of incentives which will serve to:

facilitate

the

refurbishment

Accelerated

and

upgrading of accommodation facilities both large and small;

of new accommodation facilities of not less than 250 rooms and where the

property stimulate the construction of larger accommodation properties;

write-off of interest on

loans up to $30 million where the loan proceeds are used for the construction

provides

for

conference

facilities; Accelerated write-off of interest on

encourage the consolidation of properties in the small hotel sub-sector;

loans up to $20 million where the loan proceeds are used for the construction of new

•

encourage the development of attractions focusing on our natural, historical, and cultural heritage;

accommodation

facilities

in

non-coastal areas; Accelerated

write-off of interest on

loans up to $15 million where the loans •

facilitate the upgrading of restaurants;

are

used

for

the

consolidation

of

properties in the small hotel sub-sector; •

•

encourage hoteliers to become more involved in the marketing of the island's tourism product; and assist hoteliers and restaurateurs with

the training of their staff.

The main incentives we propose to introduce which will take effect from January 1, 2000 are as follows:

Accelerated write-off of interest on

loans up to $3 million where the loan proceeds are used to refurbish and upgrade or construct facilities which emphasise our natural, historical and cultural heritage; Provision of duty-free concessions to restaurants which meet specific criteria

established by the Barbados Tourism Authority;

been spelt out here, members of the industry will be provided with the opportunity to fine tune the details of the varipus proposals

â&#x20AC;˘

Granting of tax credits to restaurants which refurbish and upgrade their

before they are brought into operation on January 1, 2000.

properties to meet specific standards; â&#x20AC;˘

â&#x20AC;˘

Accelerated write-off of 150% of any

Other Special Measures

funds spent on marketing expenses incurred by accommodation facilities;

Betting and Gaming

of

Sir, I turn next to the question of Betting

expenditure incurred on by hoteliers for training of staff by hotels and

and Gaming. It has been drawn to my attention that, with the ongoing expansion in the local hotel sectorcoupled with current requests from existing and potential gaming machine

Accelerated

write-off

of

150%

restaurants; and

in the form of duty-free concessions on

operators, there is a need for the regulations pertaining to Betting and Gaming to be

construction

revisited.

Provision of benefits for the first time

materials

for

the

establishment of time-share properties.

In the preceding incentives relating to

financing, accelerated write-off of interest will only be applicable to loans with a nominal borrowing rate greater than 8.5%. Also, there will be unlimited carry forward of the accelerated interest component in the event that it cannot be set off against income in a particular

I have therefore decided to accept the recommendations that effective September 01, 1999 the maximum ceiling pertaining to gaming machines should be increased from 550 to 800.

The licences will be allocated as follows:

year. Loans received from the Fund to be

Number of Machines

established to provide financingat concessionary rates will not be eligible for accelerated write-off

Current

Proposed

of interest.

Arcades

The new incentives we have provided will be in addition to retention of the major

provisions of the existing Hotels Aids Act as outlined earlier. However, to facilitate more efficient use of the island's limited resources, it

Hotels

100 rooms and more

20

51 - 99 rooms

15

particular, the requirement to have a kitchen and dining room fora property to benefit under

26 - 50 rooms

10

the Hotel Aids Act should no longer be

01 - 25 rooms

6

is necessary to modify those provisions. In

necessary. As a result of this proposed change there is the need to extend concessions to

eligible restaurants for the first time sothat they can improve their standards and enhance the island's tourism product.

Lastly, I wish to emphasise that even

though the broad thrust of our incentives has

Mr. Speaker, it would also appear from the large number of requests for licences being sought,the industry is doing well enough to make an appropriate contribution to the exchequer. Therefore effective September 01, 1999 the following fees will be applicable;

Gaming Machine Licences (other than Amusement Machine Licences) -

•

a whole year licence

-

This is just a'beginning of the measures to make the Barbados Port a more competitive and cost-effective port.

$10,000.00

Despite this measure leading to a reduction •

a half year licence

$ 6, 200.00

in revenue of approximately $750,000.00, it will bring about a direct benefit to the importer and

a quarter year licence -

$ 3, 800.00

indeed the ultimate consumer.

Amusement Arcade Licence

Pensions

For the issue or renewal of:

Before I go on to matters pertaining to taxation I wish today to deal with a matter that has a 21st century dimension.

•

a whole year licence

•

a half year licence

-

$ 220,000.00 $ 115,000.00

Last year, Mr. Speaker, while dealing with issues related to the National Insurance Scheme,

It is expected. Sir, that these changes will yield additional revenue of $3.4 million in a full year, and will help us to underwrite the costs of incentives that we are providing to the productive sectors.

Cargo Handling Rates

For some time the Port of Bridgetown has been considered a high cost Port. As a measure to enable the operation of the Port to make a better contribution to a more competitive economy, it is proposed at this time to reduce the cargo handling rates on full imported

I drew attention to the Report on the Ninth Actuarial

Review of the Scheme and the concerns raised therein about the difficulties

which are likely to confront the Scheme in the next century as a consequence of the changing demographics of the population. Barbados is not alone in facing these problems^ as most Social Security Schemes across the world have been or are grappling with similar difficulties.

The international responses to the so-called old age crisis has been varied, but there is an emerging consensus that a three tier system is probably the optimum solution.

containers.

The Effective January 01, 2000, the new cargo handling rates on these containers will be as follows:

Current

Proposed

RS&D

RS&D

Charge

Charge

(BDS.)

(BDS.)

Twenty- foot equivalent units (TEU's) $704.00 $680.00

tiered

or

multi-pillar

system

is

comprised of a mandatory tax-financed first pillar broadly based, providing a social safety net for the old, particularly those in the lowest income group. The second tier is also mandatory with contribution by both employer and employee, while the third tier is voluntary, offering supplemental income in retirement to persons desiring more generous pensions.

Our system of social insurance may be said, to be multi-pillar. The non-contributory old age

pension is a flat rate one that increasingly in the Forty-foot equivalent units (FEU's) $1 408.00 $1 360.00

new century will be funded on a pay as you go basis from tax revenue, given the decision

r

â&#x20AC;˘

announced in last year's budget. You will recall that with effect from September 28, 1998, all

indicative of the cultural nuances one has to take into consideration irt reforming social insurance

increases of non-contributory pensions are being

schemes.

paid from the Treasury and also all new noncontributory pensions from January next year

will be paid from the Treasury and not from the N.I.S, to ease the strain on N.I.S resources.

the pressure on what may be said to be our second pillar contributory pension element, they are not enough! The Ninth Actuarial Review of the Scheme identified some of .the options available to us if we do not want to be faced with contribution rates in excess of 20% by the third decade of the new century.

These options offered by the Review involve: (a) Raising the retirement age from 65; contributory

pensions

on

average lifetime earnings rather than on the average of the best three years; and

(c) Extending the qualifying period for a pension from 10 years to 20 years.

I feel that there is much merit in these proposals.

Our third pillar, Mr. Speaker, is represented

by the various instruments we have put in place to facilitate pension savings generally and especially savings for retirement.

To facilitate the development of private

pensions and pension fund managers, modern pension legislation is being put in place. After lengthy discussions

among

entered into an agreement with the Inter-

American Development Bank fora locally based

While these measures will relieve some of

(b) Basing

With respect to public sector pensions, Mr. Speaker, earlier this month the Government

the various

stakeholders, draft legislation is now available and will come before this Parliament in the new

year. It is of interest to note in this context, Mr. Speaker, that some members of the public have requested that the National Insurance Act be amended to permit it to hold voluntary contributions to boost persons' retirement

benefits. This represents a departure from the trend towards privatisation and perhaps is

actuarial firm to determine the financial viability

of the public sector pension system. The study will

also

investigate

alternative

funding

mechanisms.

The results of the exercise will be available

early in the new year. It is expected that the study will allow us to plan properly to meet the increasing burden of public sector pension expenses which currently are estimated at 2.5% of the country's gross domestic product.

Our approach therefore to resolving the ctisis of providing income support for an aging population may be seen, Mr. Speaker, as

comprising three elements. One aspect relates to putting government in a position to sustain its responsibilities not only towards its employees, but also to all those citizens not entitled to an

occupational pension. A second aspect deals with the various instruments made and being

made available to encourage voluntary savings

and the regulation of the environment for

private pensions. The third and, perhaps the most critical at this juncture, is ensuring the future sustainability of the National Insurance Scheme. I am strongly disposed towards the three options cited earlier.

But my administration holds the view that

any fundamental reform of the Scheme should involve consultations with the entire community of contributors and beneficiaries. Towards this end, the National Insurance Board has set up a sub-committee under the chairmanship of its

Deputy Chairman, Mr. Stephen Alleyne, to examine the options suggested by the last actuarial review, to stimulate public discussion on the issues, and to make recommendations on

the reforms to be implemented. Indeed the discussion and public education process has already commenced.

In addition, the 10th Actuarial Review of the

However, Mr. Speaker, a critical aspect of

Scheme for the triennium ending December, 1999, shall shortly be undertaken. The opportunity will be taken to look at the financial impact of the changes made in September, 1998 and to obtain detailed costings on the reform options identified in the 9th review.

the remedial work has to be a.more focused and

pro-active strategy to collect the $40 million outstanding in Value Added Taxes. I am aware that notwithstanding that court judgements have been filed against them, the delinquent registrants have refused to settle their arrears.

In the circumstances, Mr. Speaker, I do not propose to introduce any further changes to our social insurance system at this time. However,

This, Mr. Speaker is an untenable situation and the Department has been directed to use the full provisions of the VAT Act to ensure

it was necessary for me to enjoin everyone in the discussion of the issues and reform options and I shall expect to be in a position next year to return to this subject with very clearly definitive

collection of all outstanding sums. I will not allow the build up of arrears of VAT as occurred with the Consumption Tax.

proposals.

In the years ahead, we face the prospects of an erosion of our tax base as we bring to

account the adjustments required of us to meet Taxation

regional and international obligations.

Value Added Tax

I have indicated that I will progressively reduce the level of taxes on energy products.

The Value Added Tax Office continues to be

bedevilled by claims that the refund process is too slow. The office agrees that the process is not as expeditious as desired and therefore a number of changes in staffing and strategies have been and are being taken to correct the problem.

It is however my understanding that the office still continues to be plagued by a high number of faulty claims. Indeed, Mr. speaker, the evidence suggests that a number of persons are not declaring all their sales while at the same time declaring all purchases. Companies have filed applications for refunds amounting to hundreds of thousands of dollars only for audits

to reveal that greater sums are in fact owed as tax.

Our participation in the Caricom scheme for tax harmonisation will also entail that in the very near future, the Corporation Tax Rate in Barbados will have to be reduced to bring it in

line with regional standards. Over the medium term, import duties will be substantially reduced, as we give effect particularly to new international trade agreements.

The VAT was conceived of as a broad-based

tax to maintain revenue buoyancy as we make these other adjustments.

The Government therefore will substantially

improve the administration of the VAT to ensure that it does not impose cash flow burdens on the public. We are however, all things considered, not in a position to vary the rates nor the base of the tax.

As I noted earlier, Mr. Speaker, action is

being taken to improve the administration of the VAT office. A management audit of the department has been conducted and remedial action is already being taken. In addition, staff of the Management Accounting Unit of the Ministry of Finance will shortly be assigned to assist with the implementation of the corrective measures identified by the audit.

Reform of Taxes on Property

This country, in restructuring itself after the debacle of the early years of this decade, identified tax reform as crucial to that process.

Though the*process began with the reform of the direct tax system, it was acknowledged that

our successful march to become a modern

competitive economy also required a revamping of our vastly complex system of indirect taxes.

Action in this regard led to the introduction in

January, 1997 of the Value Added Tax and the simultaneous abolition of eleven (11) other indirect taxes.

As a consequence, Mr. Speaker, the one remaining area left to be tackled is taxes on

property. I have no doubt. Sir, that you will recall that last year when I addressed this issue of land, I alluded to the emotions which it seemed to evoke among all Barbadians. Indeed, because of the climate of opinion at the time, the

I wish at the. outset, Mr. Speaker, to

commend you, as Chairman, and the other members of the Committee for a'job well done.

I shall be using the recommendations of the Committee as the basis for my proposals on the Property Transfer Tax Act. It is of interest to npte, Mr. Speaker, that the

Committee,

having

considered

all

the

information made available to it, concluded that:

(a) "....the evidence does not support the perception that there are tracks ofland in Barbados which are owned by nonnationals but rather that non-resident

Parliament established a Select Committee of its

nationals own a large number of lots of

members to inquire into aspects of the issue.

land in Barbados";

That committee has submitted its report and I

shallspeakabout the recommendations madein

(b) "....foreign ownership of land does no

the report later.

harm

Our approach to the reform of property taxes is the same as that adopted in respect of

dispossessed"; and

the reform of other taxes. The intention is to

simplify their structure, assist in keeping the this country at reasonable levels, and ensuring, the reform of the taxes on property should be

designed to remove any distortionary effects they presently have oninvestment decision and activities.

Property Transfer Tax

While speaking on the issue of Property Transfer Tax last year, I noted that a Parliamentary Committee was then examining issues relating to the sale .of land to nonnationals, but indicated there was a concern about revenue loss on the transfer of property

through external companies which had to be addressed. The legislation to deal with this matter was drafted but then held pending a review of the several recommendations

contained in the Report of the Select Committee of Parliament on Ownership of Land Interest in Barbados.

the

economy and are

not

that

being

(c) "there was no need to restrict ownership by non-nationals at the present time".

unavoidable costs involved in doing business in

in particular, theinterests of the most vulnerable of our society are protected. Wealso believe that

to

Barbadians

The

Committee,

however,

made

the

observation that the evidence presented to it

revealed widespread avoidance of Property Transfer

Tax.

It

therefore

made

recommendations to prevent such practices and

it is largely on these that I have based some of the proposals I will announce.

Beyond the recommendations made by the special Committee, it has been represented that the Property Transfer Tax works a hardship by the requirement that it has to be paid by

purchasers at the time of the initial purchase of property. This has in fact impacted adversely on the feasibility of many projects, thus requiring the need for discretionary waivers by the Ministry of Finance.

I judge therefore that the Property Transfer Tax regime needs tobe modified to minimise the need for discretionary waivers, and its abuse by external companies. We will in fact create a

simpler, more transparent system that can

readily be viewed as being a more efficient and equitable method of collecting the tax.

Hence I propose to make two types of adjustments, the first pertaining to the administration of the tax, and the other establishing a new structure for its rates.

Administration Reform

12 months. The existing fine is $500 and- the term of imprisonment 3 months; and

(4) the Companies Act shall be amended to provide for compulsory disclosure of the beneficial ownership of shares of companies that own land in Barbados.

Rate Structure

Currently under a lease purchase

1.

At present the exemption threshold

agreement no property transfer tax is

before which property tax is exigibleon a land transaction is $25,000. I propose

payable on the exercise of the option to purchase. Tax is paid only on the annual rental value. Property Transfer Tax will now be payable on the exercise of the option to purchase at the same rate as on the conveyance;

to raise that threshold to $125,000. So property transfer tax does not now become payable before values of $125,000.

2.

the penalty for an offence under

Property Transfer Tax is also now

payable by both the purchaser and vendor; and I believe that to require the purchaser to pay the tax works a hardship. The property tax payable by the purchaser is hereby abolished.

Section 14 of the Property Transfer Tax Act is increased from a fine of $1000 or to imprisonment for 3 months or both

to a fine of $10,000 or to imprisonment for 12 months or both;

3.

The tax shall now be payable only by

of the said Act shall be increased as

the vendor in all transactions at the rate of 10% of the amount or value of the consideration for sale or other

follows;

disposition of the property.

(3) the penalties imposed under Section 18

(i)

for willfully, or knowingly or negligently making any false or deceptive statement or giving any

false

or

These proposals become effective from 1st September, 1999.

deceptive

information, a fine of not less

Land Tax

than $5000 and not more than

$10 000 and/or imprisonment not exceeding 12 months. The current fines are not less than

taxes owed for the three triennial periods

$250 and not more than $5000

between 1972 and 1981. The sum involved was

and the term of imprisonment 3

relatively insignificant and the deficiencies in our records suggested that the write-off was the

months; and

(ii)

Last year, Mr. Speaker, provision was made to extinguish the claims of the Government for

for aiding, abetting, counselling, inciting, conspiring with the person referred to at (i) above, a fine of $5000 or imprisonment of

best decision in the circumstances. Provision was made also for a waiver of interest and

penalties onputstanding taxes on condition that payment is effected before September 3, 1999.

All persons in arrears, Mr. Speaker, are advised

â&#x20AC;˘>

-S

to settle their indebtedness within this period, as the Commissioner of Land Tax shall

I therefore propose, Mr. Speaker, to eliminate the owner, pensipner occupied

thereafter be using all the resources available to

residence distinction and treat all residences

him to ensure that the outstanding sums are

similarly.

collected.

The

I also spoke last year about the new triennium valuation exercise for the period

April, 1999 to March, 2002 and I gave a commitment that the rates would be reviewed once the new valuations had been determined to

ensure that the average Barbadian home owner

is not unduly disadvantaged by the resultant

new

tax

structure

for

residential

properties, Mr. Speaker, shall be a simple threetiered system comprised as follows: a rate of 0.20% on the first $200,000 or

(i)

part thereof of the improved value; (ii) a rate of 0.70% on the next $300,000 or

part thereof ofthe improved value; and

rise in the value of his or her home.

(iii) a rate of 1.20% on the improved value It is my understanding, Mr. Speaker, that on average values have increased by approximately

in excess of $500,000.

15%. This evening, I therefore propose to introduce measures with respect to the

I also propose, Mr. Speaker, to tax chattel houseproperties at the newresidential rates. At

commitment given last year while addressing

the moment, these properties are taxed on their site value and attract a higher rate of tax. For

the issue of reform of the land tax.

example, a chattel house valued at $40,000 on

Mr. Speaker, at present, the valuation of

land valued at $15,000 pays tax of $120 at the

property for tax purposes is a model of

rate of 0.80% on the value of the land. Under

In the case of

the new system the tax payable on the total

residences, the tax is levied, not on the

improved value, but only on 70% of it as an

value of chattel and land of $55,000 would be $110.00, a reduction of $10.00.

initial allowance of 30% is granted. This allowance is presently 50% for pensioner occupied properties.

taxes payable on all properties valued at

unnecessary complexity.

These proposals will result in a reduction in $300,000 or less in Barbados as follows:

The tax is then applied, Mr. Speaker, on a two-tier basis for both of these categories with

Improved Value

Old Taxes

New Taxes

the rate being 0.3% on the first $100,000 of the value of the property and 0.8% on the value in

40,000

excess of $100,000. Where the property is

100,000

210.00

200.00

150,000

340.00

300.00

200,000

620.00

400.00

250,000

900.00

750.00

300,000

1 180.00

1 100.00

neither owner nor pensioner occupied, the rate of tax is 0.8% on the full taxable value.

Unimproved property attracts this same rate of tax, as do properties under agricultural cultivation, as well as hotels and apartment hotels.

The present system has been cumbersometo administer and opened to abuse. Moreover, it is

obligation to assist the most vulnerable in the

our view that an owner who rents a property is

society in restructuring the land tax. Properties

in fact assisting in alleviating the shortage of

other than residences will now attract tax on

The

Government

has

discharged

its

accommodation and should therefore not be

their improved value at the rate of 0.70%,

penalised by being taxed at a higher rate.

instead of the old rate of 0.80%. However,

1

aJ

vacant lands, will continue to attract the existing rate of 0.8%. The existing system of rebates for agriculture and hotel properties will continue.

Hotels including apartment hotels will have

impact that I do' not propose to raise other taxes to finance them.

In any event, the amounts owed in the form

their taxes calculated on 50% of the improved value of the land while qualifying agricultural

of the VAT and Land Tax are so ample that

holdings will now pay tax at the rate of 0.2%,

offset the cost of these proposals without my having to impose new or higher rates of taxes

rather than at the rate of 0.3%.

improved collection of arrears will more than

on those law abiding citizens who are not in arrears.

I wish to emphasize, Mr. Speaker, that those persons, who have concerns with the values

assigned to their properties in the recent

I have also said enough to indicate that to

revaluation exercise, should exercise their right

make this economy fully competitive regionally

of appeal under the Land Valuation Act Cap.229A to the Land Valuation Board. All

and internationally other fiscal and economic

other persons with genuine cases of hardship

adjustments will be necessary in the years immediately ahead.

may seek assistance from the Land Tax Relief Board.

This budget is the first instalment of

budgeting as it will be in the 21st century.

It has been estimated, Mr. Speaker, that, based on the valuations for the new triennium,

Much as we are anxious to move to the new

the old rates of taxes would have yielded $80.7

century, we should be mindful to carry with us some of the best practices of the 20th century.

million in revenue. The new rates will be

effective from this land tax year and will produce $61.9 million in land taxes, some $18.8

million dollars less than the system it replaces.

In that respect, 1 would wish to remind all concerned with the public sector wage negotiations of the Social Contract and its

Summary of Economic Impact

provisions that state that wage and income settlements should bear some resemblance to have

the requirements of maintaining fiscal discipline

introduced to this House have been carefully designed to strengthen the foundations upon which our economy compete in the region and

and promoting the competitive advantage of the Barbados economy.

The

menu

of

measures

which

I

internationally economy, improve the climate for investment, spur the creation of new activity in our trade sectors and provide some relief to homeowners.

Speaking on other wage related matters outside the context of those negotiations, 1must state that the Government will not support the call which was issued from a

trade union

revenue of the Treasury, on balance these

quarter recently to return our severance payment arrangements to their pre 1992

measures in themselves will result in a net

character.

While some of the measures will expand the

decrease in our revenue.

The resulting structural changes which these measures are likely to bring about in our

We have come too far, at the price of too much sacrifice to return to apparently popular but unsound policies which have not even the

economy are likely to have such a positive

remote possibility of dealing with our realities.

<

CONCLUSION

We must settle fpr no less. And that is what this Budget has been about.

Mr. Speaker, Ecclesiasticus tells us: "There are some of them who have left a name,

So that men declare their praise

Their prosperity will remain with their descendants.

It is in the hope, Sir, again using the words of Ecclesiasticus that "their prosperity will continue for ever", that I commend this Budget

to this Parliament and beg leave to move the following Resolution.

And their inheritance to their children's children ".

At the outset of this presentation, I alluded to the remarkable legacy that has been left to us by our fathers in their generation.

Our nation will greet a new century as the

leading society in the developing world. It is a fantastic achievement. The road ahead however will not always be easy.

We will live in a world which does not feel

that it owes us a living. But Ecclesiasticus tells us also that we must stand by our covenants.

And one of the great covenants of this

WHEREAS the Barbados Economy has

realised its sixth yearof strongeconomic growth and development;

AND WHEREAS the sustained strong

performance of the economy has led to substantial improvement in unemployment and

has provided the opportunity for the pursuit of policies to eradicate poverty and to improve the general standard of living for all: AND WHEREAS the Government has

developed a strategy and a set of policies to enable Barbados to enhance its competitiveness

in the new global setting in the 21st Century.

Barbadian society is that at every critical juncture in our development we have never been lacking in the will and the imagination to go bravely forward, whatever the odds.

House congratulate the Government highly for

I suggest to you and this Honourable

AND BE IT FURTHER RESOLVED THAT

Parliament that we are at one such critical juncture.

We can now go forward from being the

leading developing society to become the world's smallest developed society.

BE IT RESOLVED THAT this Honourable

its outstanding management of the economic, fiscal and social affairs of this country.

this Honourable House endorse the strategy

and policies outlined by Government to fully develop the Barbados society in the next century.

I am obliged to you. Sir.