Barbados Set For First Fiscal Surplus This FY Since FY2019/2020

• Fitch Solutions projects Barbados’ fiscal balance will come in at a surplus of 1.1% of GDP in FY2023/24 (April 2023 through March 2024). Their forecast marks a significant improvement in the country’s public finances given its FY2022/23 balance estimate of -1.4%. 
• Despite no new tax measures, the surplus will be mostly driven by strong revenue growth underpinned by a continued recovery in economic activity. 
• The rebound in economic activity which is believed will continue throughout 2023 as tourist arrivals increase further will drive an increase in revenue intake. Revenues will grow by 11.0% in the current FY (up from 28.2% of GDP in FY2022/23 to 28.3% in FY2023/24).
• The government will also continue to take steps to improve the efficiency and administration of tax collection in the months ahead by, for instance, increasing audits and encouraging electronic tax filings.
• Nonetheless, government spending will grow at a slower rate as efforts – such as reducing capital expenditure – are made to keep the primary balance in surplus.
• In the medium term, Fitch believes that the government debt-to-GDP ratio will fall from 137.9% in 2021 to 77.9% by 2027 given contingency plans to eliminate risks of non-compliance with government targets as the government maintains a fiscally conservative posture.

(Source: Fitch Solutions)