CCB expects about BDS $500m in inflows this year
Thursday March 03 2011 | 06:36 AM

THE Central Bank of Barbados (CBB) anticipates financial inflows to the tune of about Bds$500 million that will boost the country’s net international reserves in 2011

This projection is coming from Dr. Kevin Greenidge, Director of the Research and Analysis Department of the CBB as he highlighted some of the positive developments anticipated for the economy in 2011.

Addressing a recent function of the Barbados Association of Insurance and Financial Advisors at the Lloyd Erskine Sandiford Centre, Dr. Greenidge said that the approximately half billion dollars will be private and public capital flows, mainly in the form of foreign direct investment
He said that there will be private capital inflows to fund projects such as the Four Seasons, Port Ferdinand and the new Barbados Light and Power plant. “These projects should serve to boost activity in the non-traded sectors, particularly wholesale and retail, as well as construction,” said Dr. Greenidge.

The CBB official recalled that last year private capital inflows were generated by the continuation of funding to developments at Apes Hill, Lime Grove, St. Peter’s Bay and the soon to be constructed Bank’s Brewery plant.

He reported that those “public inflows included a loan of Bds$90 million from the Inter-American Development Bank to support alternative energy production and a loan of $50 million from the Caribbean Development Bank in support of official economic policy.” In addition, inflows were boosted by the flotation of a Bds$400 million bond in August, half of which went to repay a maturing obligation.

Dr. Greenidge told the insurance officials that the Barbadian economy should expand by approximately two per cent to 2.5 percent during 2011.
According to him, tourism continues to improve and other key sectors rebound and the effects of the global crisis have abated.

However, he cautioned that the economic outturn is dependent on a number of factors.
Among them, he said were “a full recovery in the tourism sector, supported by intensified marketing initiatives, along with additional seating capacity out of the US West Coast and South America, improved performance of the international business sector and the signing of new tax treaties.”

Dr. Greenidge also suggested that in fiscal year 2011/12 the deficit should improve, based on the expected pick-up in GDP and the revenue generating measures of the budget.
“The main changes in revenue are expected to come from VAT receipts, corporate and personal taxes, as well as property taxes,” he remarked.

Expenditure is also expected to increase during fiscal year 2011/12 due to higher outlays in wages and salaries, goods and services, and interest payments. As such financing activity will be centered around meeting fiscal needs and rolling over debt.

He said, “Economic stability will be driven by our ability to reduce the fiscal deficit and the debt to GDP ratio in the next couple of years, mainly through the containment of fiscal spending
and greater revenue efficiency (tax collection) – in line with the Medium Term Fiscal Strategy (MTFS),” the CBB official told the insurance representatives.

He said too that receipts from the recovering tourism sector, along with private capital inflows, should facilitate an increase in imports. However, public foreign borrowing is anticipated to be
somewhat lower than in 2010. In addition, the current account position is expected to remain roughly on par with that of 2009 (and narrower than in 2010), but the capital account surplus may be a little below the level recorded in 2010.