The National Insurance Scheme (NIS) has paid out just over $114 million in unemployment benefits up to September 25, as result of just over 31 600 unemployment claims.
This disclosure came from Senior Economic Advisor to the Government, Dr Kevin Greenidge as he addressed the Rotary Club of Barbados lunchtime session at the Hilton Barbados on Thursday.
His presentation was focused on the topic The Economy: Where Are We and Where Are We Going?, which covered areas such as the Barbados Economic Recovery and Transformation Programme (BERT) and Barbados’ response to the COVID-19 pandemic.
He said when the pandemic started to affect Barbados in March, the forecast was that about 80 per cent of the tourism sector would be “wiped out” and the economy would witness a double digit decline of about 15 per cent by the end of this year.
He warned that, to date, this analysis has not changed.
“In fact, on average we used to get every month 50 000 to 70 000 tourists. The most we have for this year since COVID-19 is 6 000 in August,” said Greenidge.
There were only 1 500 visitors in July, 500 in June, 353 in May and 100 at the end of March, he further disclosed.
“These are the kinds of tourism numbers compared to 70 000 and 80 000. So there is no question that COVID-19 has ‘lick up’ our tourism sector,” he said.
It is estimated that the tourism sector contributes some 40 per cent of economic activity to the gross domestic product and accounts for just over 25 per cent of national employment.
However, since the pandemic, the travel industry has been crippled, resulting in the closure of hotels and having an equally debilitating impact on restaurants and other tourism related businesses.
This has resulted in a dramatic rise in unemployment, which is estimated to be around 40 per cent.
Greenidge said: “This year we are at 72 871 as at September 25. The year not done yet. In terms of persons, it is about 31 635 individual claims, and NIS has paid out $114 million in claims already for the year. You see the link – unemployment [with] the tourism devastation. That is the sort of problem we have to be battling with.”
Looking at the effect of COVID-19 on Government’s finances, Greenidge explained that the fiscal position was seriously impacted because the average annual revenue intake of $3 billion would suffer due to significantly lower tax revenues from tourism and other sectors that have been devastated by the pandemic, and given that Government would need to increase its expenditure.
“So, it [COVID-19] wiped out our growth where we are. It also had a decimating effect on the fiscal position. We expect because of the impact of COVID-19 to get $450 million to $500 million less in revenue alone,” he said.
“On the other hand, we need to step up expenditure, as the Government has done, to deal with COVID-19 – outfitting polyclinics, medical supplies – just trying to mitigate the impact on the economy. So that extra increase is going to impact on the fiscal,” the economic advisor added.
Government has already revised its primary surplus down from six per cent to one per cent for the current financial year.
Greenidge told the room of Rotarians that the Government was doing what it could to help alleviate some of the impact, as he highlighted the Barbados Employment and Sustainable Transformation (BEST) programme, which was designed to provide assistance to the tourism and other sectors.
He also pointed to the Vulnerable Household Survival Programme, the Adopt A Family initiative, as well as private sector support.
Greenidge said the Government was also trying to mop up some of the unemployment by hiring people to work in several sectors, including education, health and agriculture.
“We are contracting people to do a number of things, including monitoring in primary schools to assist in ensuring that the children are physical distancing during the break; persons to work with the National Assistance Board in supporting the elderly in the community; the Where I Am project – the signage project across the island; persons to work the agriculture stations . . . ” he said.
Looking back at measures that had to be taken to lower Government’s debt, correct the fiscal deficit, beef up the international reserves and promote economic growth, Greenidge told the Rotarians that the Mia Mottley administration has been able to “put its house in order” over the past two years.
In fact, he said it was due to the primary balance of 3.5 per cent in the first year 2018/2019, and six per cent in the second fiscal year 2019/2020, that allowed the country to be in a position now to adequately provide some cushion for the blow of the unexpected COVID-19 pandemic.
Greenidge said the fix in the Government’s fiscal position had also allowed for arrears to be paid down. Central Government arrears now stand at about $145 million while the arrears of state-owned enterprises is down to approximately $60 million, down from a cumulative $1.9 billion.
He said with the $2.1 billion in foreign reserves, even with no tourism activity, “we still have enough reserves that we can cover our obligations and do what we need to do to respond”.
“For the hurricane season . . . we still have enough reserves if we need to spend. We are not hamstrung . . . . Our projection for our reserves shows that we could cover our external debt payment seven times over. Reserves is not an issue. Our issue is to survive COVID-19,” said Greenidge.
He also gave the assurance that the Barbados economy should soon start seeing more upgrades from ratings agencies, putting the island back in investment grade.