The international monetary fund (IMF) has concluded that Government’s debt is sustainable and Central Bank Governor Dr Kevin Greenidge agrees with this assessment.
More than that, he said, debt is also stable and manageable and the current indebtedness does not mean Government will not need to continue some level of borrowing as all countries do routinely.
The Governor responded to a question on the issue during his press conference recently to review the economy’s performance in 2024, at the Courtney Blackman Grande Salle, Tom Adams Financial Centre, The City.
“The debt now at 103 per cent of GDP (gross domestic product) is assessed to be stable, sustainable, meaning it’s on a trajectory towards 60 per cent comfortably, and manageable in terms of its pull from the fiscal [situation] in terms of the amount we need to repay,” he said.
Greenidge pointed out that the last IMF staff report for Barbados, published in December, found Barbados’ debt to be sustainable following a “rigorous assessment”.
“But outside of that, we in Barbados do our own analysis. The Ministry of Finance has a debt unit, the Central Bank has one, we work with them and we have the debt technical working group which assesses that all the time, [including] the new borrowings, pace of repaying, what we need right, and we are constantly putting advice to the Government in terms of that. So, in our view, the debt is sustainable and manageable.”
He noted that the current 103 per cent debt to GDP ratio “is lower than the US ratio and most developing countries”.
The Central Bank’s 2024 economic review shows that gross public sector debt was $14.76 billion at the end of December, up from $14.75 million at the end of 2023.
However, Greenidge urged: “Don’t look at the nominal value [of the debt]. As I keep saying, you have to look at the ratio. We are really trying to get it under 100 per cent but 103 per cent that is not deemed high or excessive in any measure.
“Yes, we want to bring it down [to 60 per cent by 2035/2036] and that is why we have a target because it will free up space so if you have a natural disaster, or you need to borrow, you can borrow, but that is considered a reasonable level ratio.”
The Governor said Barbados was no different from the other countries which “have to borrow to develop”.
“Every country borrows; you can’t do development work without borrowing. But the idea is that . . . if you borrow to build a road . . . activity will spring up around that area [and] new industries will pop up,” he explained.
“If you choose not to borrow, then you choose not to do development work.”
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