Local Investments Stall Poses Threat to Barbados

• A leading economist has sounded an alarm over what he has described as a significant decline in domestic investment and a stall in the renewable energy thrust that could threaten Barbados’ economic development in the new year.
• Professor of Economics Justin Robinson has suggested that the government find a way to treat these issues as a matter of urgency if it is to effectively manage the national debt. He identified these issues as the primary challenges facing the government in 2023 and likely to persist into 2024.
• Regarding the decline in project financing by local investors, he noted the government’s heavy reliance on borrowing money, deeming it a risky practice. The university academic highlighted the challenge of financing the rollover of government debt, pointing out that the absence of substantial investments by domestic investors requires foreign borrowing to meet financial needs.
•  “Domestic investments was better than the previous year, but the amount of financing that was provided by domestic investors was still small compared to historic trends, which meant that the government again had to substitute, and engage in foreign borrowing to meet its financing needs. So, think of it in two parts: there is a deficit for the year which it has to finance, but then also the debt that is maturing.”
• That being said, the economist commended the government’s management of public finances, which is reflected in solid primary surpluses, reduced deficits, and debt-to-GDP ratios. Despite positive indicators, he noted the scepticism among domestic investors, emphasising the need for a balance between foreign and domestic financing to address concerns about foreign exchange.

(Source: CariCris)