Press Release

March 2012

Overview

The economy remains stable, and we may be witnessing the beginnings of a slow recovery, but there is some distance further to the resumption of sustained economic growth. The economy recorded a balance of external receipts and payments in the first quarter of the year, and the ’s foreign exchange reserves increased by $3.8 million. Real output increased by an estimated 1.5 percent, stimulated in part by a 2.4 percent growth in tourist arrivals. The fiscal deficit was reduced from 9.1 percent of GDP in fiscal 2010/2011 to an estimated 5.4 percent in the fiscal year ended last month. This outturn is on target with the Government’s Medium Term Fiscal Strategy (MTFS), which aims to reduce the ratio of Government debt to GDP from fiscal year 2013/14 onwards. The rate of unemployment averaged 11.2 percent for 2011, and the inflation rate for 2011 was 9.4 percent, driven mainly by rising oil and food prices.

Real value added in the tourism sector is estimated to have risen by 5 percent in the first quarter, a combination of the increase in arrivals and an increase in the average length of stay. The pace of recovery in arrivals has slowed, with the Canadian and Caricom markets performing above 2011 levels, while the UK and US markets softened. The average length of stay for the first quarter increased from 4.7 days in 2011 to 5.2 days in 2012.

In the international business and financial services (IBFS) sector there was an 11 percent increase over last year in licenses renewed up to February, but new licenses granted during the first two months of the year were 37 percent fewer than those issued during the same period in 2011.

Net long-term capital inflows for the private sector were sufficient to cover external debt service, including $37 million in amortisation and $50 million in interest payments on foreign bonds and loans from international institutions. The current

1 account of the balance of payments continues to be adversely affected by persistent increases in the prices of oil and commodities, and the deficit for the first quarter is estimated at 3.8% of GDP.

In the fiscal year just ended, Government’s revenues, expenditures and the fiscal balance were on target with the Medium Term Fiscal Adjustment Strategy. The MTFS is Government’s published strategy to reduce the ratio of Government debt to GDP over time, starting with a large contraction in the fiscal deficit for the last fiscal year. The Estimates of Expenditure for the fiscal year which began this month are designed to further reduce the deficit to 4.4 percent of GDP, with additional declines in future years until the budget is balanced in FY 2016/2017.

The fiscal deficits which are projected under the MTFS will be financed mainly by surpluses of pension funds, insurance companies and other domestic investors, at market interest rates which vary according to the maturity of the security. Foreign financing contributions will be mainly from international institutions, and the cost of servicing foreign debt will remain below 10 percent of foreign earnings for the remainder of this decade. The interest cost of the government debt is projected to decline from 21 percent to 19 percent of revenue by the end of the MTFS period.

The ratio to GDP of the gross government debt owed to the private sector is 74 percent, recalculated according to international guidelines published by the IMF last year (See Box 1). Over time, as the Government implements the MTFS, this ratio and that of the external debt to GDP, which is 29 percent, are expected to decline from the beginning of FY 2013/14. The declining ratios of debt to GDP indicate that the fiscal strategy is sustainable, and there is little risk of insolvency of the Government or the country in the foreseeable future, based on the IMF’s debt sustainability analysis.

The first issue of the Central Bank’s Financial Stability Report, published online in January, revealed a system that is stable, well capitalised, liquid and profitable, even though there was some deterioration of credit quality in 2010. Stress tests revealed no systemic weaknesses among commercial

2 banks, insurance companies, large credit unions, or other entities large enough to pose a potential risk to the financial system as a whole. There was also no systemic risk exposure from financial linkages to the rest of the Caribbean, Canada and elsewhere. The resolution of the failed insurance company, Clico, has no implications for the stability of the financial system as a whole.

Growth Prospects The economy is expected to grow by a little less than one percent in 2012, with the major contribution coming from tourism and construction, much of it tourist-related. In addition, several low-to-medium income housing initiatives are being undertaken by Government.

The current account deficit is expected to widen slightly, based on a projection of higher oil prices. Foreign direct investment in tourism-related projects is expected to be higher this year, with inflows for major projects such as the Four Seasons Resort, the Merricks Resort and Port Ferdinand. While some losses are projected, foreign reserves are expected to remain at levels that are adequate. The Central Bank and the fiscal authorities monitor the external accounts on a daily basis, with a view to timely fiscal and monetary action to protect the foreign exchange reserves as necessary.

In the medium term of three to five years, investment already underway in tourism-related projects creates additional capacity in the remunerative high-end of the market, as a basis for renewed growth. The tourism product is being further diversified, with the development of new markets and ancillary services, including initiatives to capitalise on the designation in 2011 of and its Garrison as a UNESCO World Heritage Site. In addition, new strategies are being initiated to enhance Barbados’ competitive advantages in the IBFS sector, to improve service quality and to take full advantage of the country’s leadership in the negotiation of double taxation agreements. Government is promoting greater use of alternative energy, and incentives for commercial and household use of alternative energy sources are being strengthened, with assistance from the Inter-American Development Bank (IDB). A strategy for the renewal of the agriculture and agro- industry is being developed. On the basis of these

3 initiatives, the Central Bank projects sustained growth in the region of 2 to 3 percent for the Barbadian economy in 2015 and beyond.

The Real Economy

Tourism The primary factors in the growth of tourist arrivals were an improved performance in the Canadian market and the continued growth in visitors from the Caribbean. The addition of a weekly charter service by Air Transat boosted Canadian arrivals. The number of persons travelling from the Caribbean islands increased significantly due to the specials offered by regional airlines during the review period and the regional cricket games held during January. However, the suspension of Redjet’s services is likely to weaken the degree of price competition for regional travel and may dampen the rise in Caricom arrivals going forward.

A fortnightly charter service out of Sweden pushed Tourist Arrivals By Major Source Markets up European arrivals. However, arrivals from the UK JANUARY - MARCH Actual % have been weaker due primarily to the MAJOR MARKETS 2011 2012ᵖ CHG CHG discontinuation of cruise and stay-over packages that were previously offered by two cruise ships. In U.S.A 37,945 36,389 -1,556 -4.1 addition, the USA market has been adversely Canada 28,194 30,474 2,280 8.1 affected by the reduction of seating capacity out of U.K 55,684 55,293 -391 -0.7 Dallas and the discontinuation of the Delta Airlines Germany 2,516 2,849 333 13.2 flight from Atlanta. Other Europe 8,486 8,625 139 1.6 Trinidad & Tobago 5,508 9,026 3,518 63.9 International Business and Financial Services Other Caricom 12,425 12,019 -406 -3.3 The IBFS sector continues to be faced with strong Brazil 1,368 1,177 -191 -14.0 tax competition from other Caribbean jurisdictions. Other Countries 5,118 5,244 126 2.5 However, Barbados was able to retain its relative market share. A total of 1,971 licenses were renewed TOTAL ARRIVALS 157,244 161,096 3,852 2.4 28,147 24,020 -4,127 -14.7 since the beginning of 2012 (data up to February), Cruise Passengers (January) Source: BSS & CBB Estimates 11.3 percent above the renewals that were issued during the comparable period last year. Eighty-one new licenses were issued to IBFS companies, compared to 118 in the corresponding period of 2011. There were 53 new licenses issued to international business companies, down from 105 in the similar period of 2011. Five new societies with restricted liabilities were registered, two less than in the comparable period of last year.

4 Manufacturing and Agriculture Based on available data, it is estimated that manufacturing output continued to be depressed during the first quarter of 2012. Non-sugar agriculture is projected to have contracted by 4.1 percent, while sugar production is expected to decline by approximately 7.5 percent for 2012. The late start to the harvesting is expected to compound weather challenges experienced over the planting period.

Other Real Sector Activities The construction sector is estimated to have advanced by a further 3.4 percent during the first quarter of 2012, on account of activity in the housing market, as well as tourism-related projects. The wholesale and retail sector is estimated to have grown by 2 percent, spurred in part by an improved tourism outturn and increased imports.

Prices Food and oil price inflation continued to drive retail prices. At the end of 2011, the 12-month moving average rate of inflation reached 9.4 percent representing a 3.6 percent increase when compared to the previous year. Some of the main categories increasing over the year included fuel and light (23.5 percent), food (8.2 percent) and housing (4.4 percent).

Balance of Payments During the review period, the current account deficit widened when compared to the same period in 2011, as spending on retained imports rose by 4.9 percent, on account of an average 30% increase in the price of imported fuels. Imports of food and beverages also rose for the quarter and led to a 6 percent increase in consumer goods. Exports of locally produced goods grew by an estimated 5 percent, attributed to improvements in chemicals and electronic components, while growth in tourism receipts was modest. Though lower than the comparable period of last year, the net inflow of capital for the first three months of 2012 was sufficient to fully finance the larger deficit on the current account.

The Public Sector Total tax revenue increased by 9 percent over the 2011/12 fiscal year. Value added tax (VAT) revenues increased by 25 percent and excise taxes rose by 12

5 Foreign Exchange Earnings percent, reflecting the increase in the rate of VAT (BDS $M) and the excise tax charged on gasoline, as well as 2008 2009 2010 2011 (P) 2011 Q 1 2012 Q 1* Foreign Exchange Earnings 6,128.6 5,005.9 5,383.0 5,001.4 1,258.1 1,207.5 higher oil prices. There was a 7 percent rise in Travel 2,388.7 2,136.0 2,067.2 1,947.7 595.2 600.0 personal income taxes following the amendment of Other services 1,234.6 911.7 1,179.4 1,183.5 279.5 273.1 tax allowances previously granted on travel and Food and Beverages- of which 144.1 122.2 129.8 139.1 31.9 34.6* Rum 66.0 57.2 66.8 70.9 17.0 n.a entertainment. Corporate tax receipts remained Lard and margarine 19.8 18.5 18.8 19.1 4.1 n.a relatively unchanged from the previous fiscal year, Other Food 43.0 32.2 31.2 36.8 7.7 n.a Other Beverages 15.3 14.2 13.1 12.3 3.1 n.a while property taxes declined by 2 percent. Sugar 45.1 40.7 22.5 21.2 0.2 n.a Chemicals 66.8 58.2 124.0 140.7 37.7 41.5* Total expenditure fell by approximately 2 percent. Electronics 23.8 16.3 19.4 21.5 7.3 9* Crude 49.6 37.4 47.2 73.7 16.9 n.a Grants to public institutions were cut by 14 percent Other manufacturing 183.6 173.3 171.2 162.4 35.4 n.a but there was a 5 percent rise in spending on goods Income 357.1 514.5 472.4 471.5 102.2 94.8* Transfers 241.1 187.1 222.3 228.9 52.1 49.7* and services and interest payments rose 4 percent. P - Provisional Current expenditure fell by 2 percent, while capital * - Forecast expenditure was down 14 percent.

Approximately 96 percent of the funds required to finance the deficit were sourced domestically. Private non-bank entities, particularly insurance companies, provided 43 percent of the required domestic financing while NIS supplied 25 percent, and commercial banks provided the remainder. Government was a net depositor at the Central Bank during the year. The major foreign inflow during the fiscal year 2011/12 was a second energy policy- based loan of US $70 million from the IDB. Other project funds received amounted to $21 million, while amortization payments totaled $143 million. In addition to financing Central Government, NIS extended loans totalling $108 million to five public corporations1, bringing its total financing of the public sector close to that of the previous fiscal year. Government debt2 increased to the equivalent of 74 percent of GDP at the end of March 2012, compared to 72 percent a year earlier.

Financial Sector Domestic deposits at commercial banks fell by $38.2 million for the year (data up to March 21), while credit to the non-financial private sector increased by $15.6 million. The excess liquidity ratio edged up slightly, moving from 9.6 percent in December 2011 to 10.9 percent at the end of March 2012. The majority of this increase was attributed to increase cash holdings by commercial banks ($61 million), in addition to excess Treasury Bill holdings of $38

1 UWI, Cave Hill Campus; Transport Board; Queen Elizabeth Hospital; Barbados Tourism Authority 2 See Box 1.0

6 million. The average Treasury Bill rate and the on commercial banks’ deposits and loans remained unchanged.

Loans extended by credit unions expanded by 6.5 percent (or $74 million) for 2011 and were primarily driven by new mortgages which generally represent about 40 percent of the credit unions’ loan portfolio. Deposits at credit unions and other nonbank deposit taking institutions grew by 8 percent and 4 percent, respectively, by the end of 2011. Data to January 2012 show that the mortgage portfolio at trust and finance companies fell marginally (by less than one percent), while private mortgages at commercial banks declined by 1.8 percent.

7 Box 1: New Standard for Reporting Public Debt Statistics

Last year the IMF issued the Public Sector Debt Statistics – Guide for Compilers and Users, in association with the Bank for International Settlements, the Paris Club, the Commonwealth Secretariat, the OECD, the European Central Bank, UNCTAD, Eurostat and the World Bank. The Debt Statistics produced by the Central Bank have now been revised consistent with this guidance.

The Guide states “Institutional units controlled by government, that are legally established as corporations but are not market producers (i.e. they do not sell their output at economically significant price), are classified as part of the general government sector, not the public corporations sector.” (Page 7). The principal implication for Barbados of the adoption of the Guide has to do with the treatment of NIS. NIS falls within the “general government” sector by the definition just given, rather than being a “public corporation”, as per the previous Central Bank treatment.

8 Table 1: Economic Indicators

2005 2006 2007 2008 2009 2010 2011 p Mar 2011 Mar 2012 ᶠ Real growth (%) 4.0 5.7 1.7 0.1 -3.7 0.2 0.4 (1.4) 1.5 Tradables (%) -0.8 8.1 -7.3 -0.3 -4.3 -0.4 -2.5 -7.4 2.1 Nontradables (%) 5.6 5.0 4.5 0.2 -3.6 0.4 1.2 0.5 1.3 Inflation (%)** 6.1 7.3 4.0 8.1 3.6 5.8 9.4 6.5 9.7 Unemployment (%)** 9.1 8.7 7.4 8.1 10.0 10.8 11.2 10.0 NA

Foreign exchange reserves ($ Million) 1236.5 1194.1 1549.9 1359.3 1488.7 1435.3 1420.3 1473.1 1424.2 BoP current account (as % GDP) -10.6 -8.4 -5.5 -11.2 -7.1 -6.1 -8.6 -1.7 -3.8 Net capital inflow 661.9 709.9 1020.2 546.1 731.7 512.1 685.7 156.3 95.7

Debt (as % of GDP), Gross* 49.0 49.4 53.2 57.1 66.2 74.0 77.6 71.8 73.9 Debt (as % of GDP), Net* 30.4 34.3 36.7 38.2 47.6 53.8 56.6 52.8 54.4 External debt service to BoP current account credits 4.6 4.5 4.4 5.0 5.5 13.6 6.1 6.1 7.0 Govt interest payments (as % of revenue) 22.8 22.8 22.8 22.8 22.8 22.8 22.8 16.9 15.8

Treasury-bill rate 6.26 6.56 4.90 4.81 3.44 3.35 3.43 3.5 3.5 US treasury-bill rate 3.89 4.85 3.00 0.03 0.05 0.12 0.11 0.1 0.1 Average deposit rate 4.12 5.11 4.80 4.07 2.65 2.69 2.53 2.7 2.5 Average loan rate 10.63 10.87 10.68 10.25 9.66 9.39 8.75 9.3 8.9

Fiscal Year 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 Fiscal deficit (% of GDP) -2.3 -2.8 -3.4 -5.1 -7.6 9.1 5.4 Fiscal Current Account (as % of GDP) 2.0 1.5 -0.2 -2.2 -5.5 -7.5 -4.0 Revenue (as % of GDP) 27.6 26.6 27.6 29.9 26.4 26.7 28.5 Expenditure (as % of GDP) 29.9 29.4 31.0 35.0 34.0 35.8 33.9 Govt interest payments (as % of revenue) 13.8 14.7 13.9 15.3 18.8 22.3 21.0 P - Provisional *Represents Central Government debt inclusive of Public Private Partnership (PPP) guaranteed debt **To December 2011

9 Table 2: GDP by Sector and Activity (BDS $Million, Constant Prices)

Avg contribution to GDP (%) 2005 2006 2007 2008 2009 2010 2011 p Mar-11 Mar 2012 ᶠ Tradables 20.9 241.4 261.0 242.0 241.3 230.9 230.0 224.1 61.7 63.0 Tourism 12.2 127.0 150.0 130.7 131.4 126.9 131.4 131.2 39.9 41.9 Rum & Other beverages 0.4 6.4 6.4 6.3 6.2 5.4 5.2 4.8 1.3 1.2 Food 0.8 11.8 11.7 11.5 11.3 9.9 9.5 8.8 2.3 2.3 Furniture 0.1 1.3 1.3 1.2 1.2 1.1 1.0 1.0 0.2 0.2 Chemicals 0.2 2.8 2.8 2.7 2.7 2.3 2.2 2.1 0.5 0.5 Other manufacturing 0.9 13.5 13.4 13.3 13.0 11.3 10.9 10.1 2.6 2.6 Sugar 0.9 16.4 14.5 14.6 13.6 13.7 11.0 10.1 3.2 3.0 Other agriculture 3.2 34.7 33.7 34.7 35.7 37.0 36.6 34.5 6.2 6.0 Nontradables 79.1 789.0 828.1 865.4 867.1 836.0 839.2 849.1 203.7 206.3 Electricity, etc 4.1 38.9 42.6 43.1 43.0 43.3 44.2 43.5 10.3 10.1 Construction 6.9 99.3 98.9 98.9 91.1 78.6 70.8 73.9 23.3 24.1 Distribution 22.2 215.9 230.9 246.0 244.0 232.5 237.9 238.0 47.9 48.9 Transport, etc 9.6 91.0 96.4 102.2 105.3 102.4 102.6 103.3 24.5 24.6 Finance, other svcs 19.8 185.9 197.1 208.9 213.5 207.4 209.5 212.0 53.6 54.2 Government 16.2 148.1 152.6 157.1 161.8 166.7 168.4 173.4 42.9 43.3 Real GDP 1030.4 1089.1 1107.5 1108.4 1066.9 1069.2 1073.2 265.4 269.3 Nominal GDP 7837.3 8395.6 8970.5 8690.8 8786.1 8528.9 8806.4 2251.6 2403.8

Real growth rates 4.0 5.7 1.7 0.1 -3.7 0.2 0.4 -1.4 1.5 Tradables -0.8 8.1 -7.3 -0.3 -4.3 -0.4 -2.5 -7.4 2.1 Nontradables 5.6 5.0 4.5 0.2 -3.6 0.4 1.2 0.5 1.3

10

Table 3: Balance of Payments (BDS $Million)

2005 2006 2007 2008 2009 2010 2011 (P) 2011 Q1 2012 Q1* Current Account -830.5 -703.5 -490.6 -972.5 -620.2 -517.4 -759.2 -34.1 -91.9 Inflows 4,235.1 4,732.9 5,228.8 5,200.5 4,511.6 4,803.6 4,775.7 1258.1 1260.6 Travel 1,792.2 2,113.3 2,377.3 2,388.7 2,136.0 2,068.1 1,947.2 595.2 600.0 Other services 1,215.0 1,093.5 1,070.1 1,234.6 911.7 1,179.4 1,187.5 279.5 273.1 Rum 50.7 44.3 67.5 66.0 57.2 66.8 70.9 17.0 n.a Other beverages 17.9 9.8 11.8 15.3 14.2 13.1 36.8 7.7 n.a Other Food 42.0 46.0 55.5 43.0 32.2 31.2 12.3 3.1 n.a Sugar 45.4 44.6 46.2 45.1 40.7 22.5 21.2 0.2 n.a Chemicals 56.1 60.2 74.6 66.8 58.2 124.0 140.7 37.7 41.5 Electronics 28.7 37.6 21.6 23.8 16.3 19.4 21.5 7.3 9.0 Crude 33.4 46.3 52.3 49.6 37.4 47.2 73.7 16.9 n.a Other mfg 136.7 190.8 173.0 183.6 173.3 171.2 162.4 35.4 n.a Income 239.8 222.1 396.5 357.1 514.5 472.4 476.5 102.2 94.8 Transfers 265.2 283.8 331.6 241.1 187.1 222.3 228.9 52.1 49.7 Outflows 6,106.1 6,937.1 7,704.5 7,683.9 6,725.7 6,941.4 5,535.0 1292.3 1352.6 Imports (BOP basis) 3,031.1 3,204.9 3,399.2 3,622.0 2,732.1 3,013.2 3,212.7 733.6 772.3 Services 1,311.5 1,383.9 1,333.1 1,472.0 1,358.2 1,465.3 1,460.1 342.8 361.0 Income 589.8 734.9 772.1 849.0 894.6 696.2 707.8 185.6 191.0 Transfers 134.3 118.1 219.5 187.5 146.5 144.5 139.4 26.6 26.9 Capital Account 661.9 709.9 1,020.2 546.1 731.7 512.1 685.7 213.0 95.7 Long term 445.0 1319.3 1002.5 803.2 769.4 969.7 611.7 151.0 77.7 Public 217.5 66.9 28.9 -122.5 408.6 306.6 31.4 -18.5 -37.2 Private 227.4 1252.4 973.6 925.7 360.8 663.1 580.2 169.4 114.9 Other 43.6 -18.3 187.7 27.0 155.7 -228.1 231.7 52.0 30.6 Short term 173.4 -591.2 -169.9 -284.2 -193.4 -229.5 -157.6 10.0 -12.7 Errors 30.3 76.4 28.8 -71.3 -32.7 66.4 84.2 -117.1 0.0 Overall balance -138.3 82.8 558.4 -497.8 78.8 60.6 10.7 61.7 3.8

Change in FXR: + increase/- decrease 138.3 -82.8 -558.4 497.8 -78.8 -60.6 -10.7 -61.7 -3.8 IMF Basis: - increase/+ decrease -45.9 42.3 -355.8 190.6 -129.3 53.4 14.9 -37.9 -3.8 Commercial banks: + increase/- decrease -184.2 125.1 202.6 -307.2 -50.5 114.0 25.6 23.8 0.0 P - Provisional * - Forecast

11 Table 4: Summary of Government Operations (BDS $Million)

2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12(e) Tax Revenue 1820.3 2042.3 2130.8 2337.0 2396.1 2156.3 2168.4 2362.1 i) Direct Taxes 749.6 859.2 976.5 1050.0 1038.4 951.1 883.8 920.4 Personal 303.2 306.3 306.7 334.9 375.5 386.3 395.4 422.3 Corporate 286.9 359.9 445.5 521.0 447.2 372.8 294.2 293.7 Property 112.9 137.4 151.4 103.1 120.9 113.3 118.2 116.5 Other 46.5 55.6 73.0 91.0 94.8 78.7 76.0 87.9

ii) Indirect Taxes 1070.7 1183.1 1154.2 1286.9 1357.7 1205.2 1284.5 1441.7 Stamp 18.9 22.0 26.9 22.0 18.7 11.3 11.8 13.1 VAT 598.2 682.7 674.8 789.6 800.1 703.8 764.8 952.5 Excises 149.4 172.2 145.3 164.3 165.1 147 146.0 163.1 Import Duties 193.0 180.5 186.5 197.3 219.4 178.4 191.3 196.9 Other 111.3 125.8 120.8 113.7 154.4 164.7 170.6 116.0

Non Tax Revenue & Grants 98.0 119.2 105.7 134.7 201.3 167.424 110.5 149.9 Non Tax Revenue 77.1 97.0 87.7 111.4 180.8 111.1 84.1 112.3 Grants 0.0 0.0 0.0 4.0 7.5 35.6 3.8 14.3 Post Office - Revenue 20.8 22.2 18.0 19.3 13.0 20.724 22.6 23.3

Current Expenditure 1838.9 2001.6 2112.4 2492.2 2786.7 2809.9 2919.8 2865.7 Wages & Salaries 645.5 687.5 698.6 809.0 832.7 861.1 860.2 864.0 Goods & Services 213.2 233.2 263.3 361.9 420.6 417.3 378.4 397.5 Interest 263.4 298.9 329.9 343.6 396.4 435.8 507.2 527.1 External 103.5 105.7 119.2 140.5 148.9 153.7 147.4 148.3 Domestic 159.9 193.1 210.7 202.2 247.5 282.1 359.8 378.7 Transfers & Subsidies 716.7 782.1 820.6 977.7 1137.0 1095.8 1174.0 1077.2 Grants to Individuals 257.8 279.3 304.2 314.2 Grants to Public Institutions 824.7 756.1 808.2 699.3 Subscriptions and Contributions 19.9 23.3 25.9 22.2 Non-Profit Agencies 34.6 37.0 35.7 41.4

Capital Expenditure & Net Lending 223.7 340.1 357.6 286.3 253.7 178.3 134.7 119.6 Capital Expenditure 223.5 252.4 249.5 238.2 232.0 167.7 108.3 93.2 Net Lending 0.3 87.8 108.1 48.1 21.7 10.6 26.4 26.4

Fiscal Balance -144.3 -180.3 -233.5 -306.9 -443.0 -664.5 -775.6 -473.2 Fiscal Balance to GDP (%) -2.1 -2.3 -2.8 -3.4 -5.1 -7.6 -9.1 -5.4 Sources: Accountant General, Ministry of Finance and Central Bank of Barbados (e): Estimate

12 Table 5: Public Debt Outstanding (BDS $Million)

2005 2006 2007 2008 2009 2010 2011 Mar-11 Mar-12 (p) Government External Debt 1,554.4 1,643.7 1,720.9 1,978.0 2,225.1 2,482.6 2,520.7 2,462.0 2,485.2 Domestic Debt (of which) 2,285.4 2,503.4 3,052.8 2,982.3 3,423.0 3,659.8 4,127.9 3,685.6 4,164.6 PPPs 12.9 390.9 555.8 575.6 618.7 608.0 594.7 604.7 587.4 Justice Improvement - 43.4 73.3 103.0 127.1 130.7 132.3 130.7 132.3 Coast Guard 12.9 59.5 59.5 52.6 47.9 43.3 38.7 43.3 38.7 Prison - 288.0 288.0 285.0 282.0 278.8 275.1 278.8 271.0 ABC Highway - - 135.0 135.0 161.7 155.2 148.6 151.9 145.4 Debentures 1,225.3 1,261.4 1,418.2 1,585.4 1,820.1 1,962.7 2,279.7 2,086.2 2,346.2 T-bills 592.23 363.28 569.56 529.39 752.82 890.79 953.40 804.3 933.0 SDRs (+) 0.2 0.1 0.2 0.1 170.2 171.6 184.0 171.6 184.0 Gross Government Debt* 3,840.0 4,147.2 4,773.9 4,960.5 5,818.3 6,314.0 6,832.6 6,319.3 6,833.8 Government Assets (-) 1,454.6 1,269.0 1,486.1 1,644.4 1,633.0 1,728.8 1,848.8 1,672.0 1,807.4 Government Assets 853.9 701.3 765.2 825.9 872.3 968.0 1,088.0 911.2 1,046.6 Deposits 424.7 212.2 213.7 219.4 239.8 357.7 377.0 254.7 354.7 Central bank 295.5 112.8 97.0 61.2 90.2 239.4 277.4 145.9 222.1 Commercial Banks 129.1 99.4 116.7 158.3 149.6 118.3 99.6 108.8 132.6 Sinking Fund 429.2 489.1 551.6 606.5 632.5 613.3 711.0 656.5 691.9 Sinking funds for dom. debt 306.0 329.6 355.3 371.3 409.2 425.6 470.9 449.7 473.6 Sinking funds for fgn. debt 123.2 159.5 196.3 235.2 223.3 187.7 240.1 206.8 218.3 Other Government Assets** 600.7 567.8 720.8 818.5 760.8 760.8 760.8 760.8 760.8 Liquid NIS Assets 424.8 400.9 505.8 525.7 468.0 468.0 468.0 468.0 468.0 Cash 10.6 16.3 16.1 13.1 10.8 10.8 10.8 10.8 10.8 Due From Banks and Fin. Inst 414.2 384.6 489.7 512.6 457.2 457.2 457.2 457.2 457.2 External Assets of NIS 175.9 166.9 215.0 266.9 292.7 292.7 292.7 292.7 292.7 Net Government Debt 2,385.4 2,878.2 3,287.8 3,316.0 4,185.3 4,585.2 4,983.8 4,647.2 5,026.5 Public Sector Gross Government Debt 3,840.0 4,147.2 4,773.9 4,960.5 5,818.3 6,314.0 6,832.6 6,319.3 6,833.8 Debt Held By Central Bank (-) 74.7 0.6 20.5 - 101.7 95.0 223.7 93.7 122.2 T-Bills 74.1 - 19.9 - 26.7 20.0 177.4 18.7 47.2 Debentures 0.6 0.6 0.6 - 75.0 75.0 75.0 75.0 75.0 Public Corporations' Debt (+) 876.5 976.5 1,183.9 1,238.7 1,422.1 1,509.9 1,527.9 1,435.9 1,527.9 Domestic 729.0 839.8 970.4 1,034.6 1,194.3 1,195.1 1,223.0 1,123.1 1,223.0 External 147.5 136.7 213.5 204.0 227.8 314.8 304.8 312.7 304.8 Gross Public Sector Debt 4,641.8 5,123.1 5,937.3 6,199.1 7,138.7 7,728.9 8,136.8 7,661.4 8,239.5 Net Government Debt 2,385.4 2,878.2 3,287.8 3,316.0 4,185.3 4,585.2 4,983.8 4,647.2 5,026.5 Other Central Bank Assets (-) 833.4 933.9 1,282.3 1,090.0 1,156.7 1,181.8 1,204.3 1,244.2 1,210.0 Foreign Assets 833.4 888.5 1,244.9 1,045.2 1,126.1 1,150.2 1,171.1 1,215.7 1,169.2 Other Foreign Assets 833.2 888.4 1,244.7 1,045.0 955.9 978.5 987.1 1,044.0 985.2 SDRs 0.2 0.1 0.2 0.1 170.2 171.6 184.0 171.6 184.0 Domestic Assets 0.0 45.4 37.4 44.8 30.6 31.6 33.2 28.5 40.8 Public Corporations' Deposits 212.9 162.5 185.4 213.8 289.4 306.6 311.7 322.0 323.5 Net Public Sector Debt 1,339.1 1,781.8 1,820.0 2,012.2 2,739.2 3,096.8 3,467.8 3,081.1 3,493.0 Gross Government Debt/GDP 49.0 49.4 53.2 57.1 66.2 74.0 77.6 71.8 73.9 Gross Public Sector Debt/GDP 59.2 61.0 66.2 71.3 81.2 90.6 92.4 87.0 89.1 Net Government Debt/GDP 30.4 34.3 36.7 38.2 47.6 53.8 56.6 52.8 54.4 Net Public Sector Debt/GDP 17.1 21.2 20.3 23.2 31.2 36.3 39.4 35.0 37.8

Memo Debt Held by NIS (-) 1,100.9 1,253.9 1,404.0 1,673.0 1,849.6 2,213.8 2,380.9 2,327.5 2,439.7 T-Bills 30.4 125.4 120.8 128.5 105.1 185.3 270.9 259.3 293.0 Debentures 1,070.5 1,128.5 1,283.3 1,544.6 1,744.5 2,028.5 2,110.0 2,068.2 2,146.6 * Equivalent to Central Government debt based on the IMF's Public Sector Statistics: Guide for Compilers and Users ** Due to data unavailability, balances have been kept at 2009 levels

13 Table 6: Financial Indicators (BDS $Million)

2006 2007 2008 2009 2010 2011 Mar 2011 Mar-12 Commercial banks Assets/liabilities* 9069.3 11357.2 11801.4 11166.6 10992.5 10480.8 11419.3 10499.7 Cash 127.8 142.6 142 135 148.9 151.4 113.1 119.8 Net balance at CBB 197.3 403.7 384.7 440.8 260.2 393.5 460.6 228.0 Borrowing 27.8 74 36.7 44.6 57.9 56.4 64.7 161.0 Treasury-bills 245.0 420.4 467.6 535.3 659.2 594.6 572.1 684.4 Other govt securities 597.2 610.4 628.2 630.3 541.4 566.4 575.8 569.4 Credit to Non-financial Private Sector 4292.9 4513.5 5010.9 5052.1 5065.5 5201.8 5170.5 5217.4 Total Loans 4853.5 5097.2 5727.6 5777.8 5811.4 6512.5 5774.9 6542.3 Net foreign assets 488.4 699.7 391.4 341.9 455.9 295.4 479.8 271.8 Domestic Deposits 6297.3 7344.3 7607.1 7586.9 7470.3 7675.7 7815.7 7636.9 Total Deposits 7337.8 9056.4 8935 8783.6 8650 8222.4 9045.2 8043.5 Excess cash reserves 38.7 159.5 173.4 178.2 93.7 119.0 262.4 180.1 Ratio to deposits 0.6 2.2 2.3 2.4 1.3 1.6 3.4 2.4 Excess liquid assets 417 659.4 679.1 757.4 702.1 733.5 790.5 832.6 Ratio to domestic deposits 6.6 9.0 8.9 10.0 9.4 9.6 10.1 10.9 Liquid Assets 715.5 1084.5 1061.4 1211.2 1262.9 1655.3 1340.8 2033.2 Liquid assets to domestic deposits 11.4 14.8 14 16 16.9 21.6 17.2 26.6

Capital Adequacy Ratios 14.4 16.4 16.1 17.5 17.1 19.3 18.1 n.a. Non Performing Loan Ratio 4.5 2.9 3.4 7.9 10.8 10.9 P 10.5 n.a. Net Write-offs to Loan Loss Reserves -24.8 22.6 1.1 1.8 4.3 16.9 2.6 n.a. Return on Equity 19.5 19.3 17.3 15.4 12.3 6.7 11.5 n.a. Return on Assets 2 1.7 1.4 1.6 1.2 1.0 1.1 n.a. Net foreign assets ratio 5.4 6.2 3.3 3.1 4.1 2.2 4.2 2.6 Foreign Currency Deposits 1040.5 1712 1327.9 1196.7 1,118 546.7 1229.5 406.6 Foreign Currency Loans 95.5 48.6 52.1 27.1 26.4 27.2 25.1 27.2 Foreign Currency Deposits to Total Deposits (%) 14.2 18.9 14.9 13.6 13.6 6.9 13.6 5.1 Foreign Currency Loans to Total Loans (%) 2 1 0.9 0.5 0.5 0.4 0.4 0.4

Interest rates Treasury-bill 3 month 6.6 4.9 4.8 3.4 3.4 3.5 3.5 3.5 US treasury-bill 3 month 4.9 3.0 0.0 0.1 0.1 0.0 0.1 0.1 Average deposit 5.1 4.8 4.1 2.7 2.7 2.5 2.7 2.5 Average lending 10.9 10.7 10.3 9.7 9.4 8.8 9.3 8.9

P - Provisional

14