Barbados between rock & hard place

Barbados once the pearl of the Caribbean is encountering some tough times these past few years. The economy has grown only 1.5 percent since 2009 with a 0.6 percent growth in 2014 up from negative growth in the previous year.
If slow growth was the only problem it would not be so bad. The country faces mounting debt with a gaping fiscal deficit and rising interest cost. The fiscal numbers showed improvement last fiscal year to March, with higher revenues and grants and lower cost before debt servicing, but still ended with a $633 million deficit or 7.2 percent of GDP.
The data that tells of a major problem, is to be found in corporate taxes. Having taken in $521million in 2009 the take has fallen by $342 million to only $179 million in the latest fiscal year, partially offset by a 31 percent rise of $102 million in personal taxes. Vat tax took in 16 percent more in the 2015 year than it did in 2009, an increase of $125 million and that is to benefit from a broadening of items to be included as of the new fiscal year.
Good news| Wages remained at roughly the same level as in 2009 at $802 million but is down from $872 million in 2013, while the government cut subsidies and transfers by $177 million in the last year. Overall revenues rose in the year to March 2015 above that of 2014 by $171 million and just $34 million ahead of the 2009 intake. The other good news is that while the deficit is high it is down from 11.2 percent of in 2014. On the negative, the bulk of the funds borrowed is from overseas and with the credit rating downgraded recently, borrowing cost which is set to rise due to large deficit will increase move than might have been contemplated earlier.
In its 2015/16 budget presentation, the projection for the 2015/16 fiscal year is revenues of $2.539 billion with the fiscal deficit is projected at $734 million or 8.3 percent of GDP with measures that will raise B$200 million in additional taxes and excise duties in the full fiscal year announced, this could result in reduced economic activity and may negatively affect inflows.