The government’s Department of Strategic Policy and Planning recently forecast a strong growth rate in the economy of 3.4 percent in 2013; however, it is not clear if the report refers to the calendar year or the fiscal year. The government’s fiscal year began April 1 and ends March 31, 2014.
The report suggests a 2% recovery in the tourist sector, which represents almost 43% of the economy.
Tourism hit an all time high in 2011 and declined over 3.5% last year. It is not clear why growth has been forecast. This may be as a result of the new Beaches resort coming on stream. However, some sectors feel that rising airline prices and resort prices adjusted upwards when VAT was looming and the new rise in the tourism taxes that increases costs to visitors may result in further decline not growth in tourism.
Another portion of the report being questioned is the statement pertaining to growth projections beyond 2013. The report says, “Projections beyond 2013 show a continuous positive growth rate as people adjust to new standards of living.” However, the “new standard of living” referred to is likely to be a lower one, with increased taxes on imports elevating the cost of living.
The report, while admitting to a serious reduction in the import of building materials, lists a number of new projects approved by the interim government that may soon start up. These are expected to provide work for the local residents and, given the reduction in concessions granted in later development agreements, may help increase government revenue.
Offsetting this is the need to pay down the balance of the $260 million loan to prepare for a refinance arrangement, which must be in place by 2016.
The report also lays the blame for the poor economy at least in part on the US recession, which seemed to peak out in 2009. However, the overheated economy of the TCI prior to 2009, when the government borrowed huge sums and engaged in a spending spree, running up $360 million in accumulated unpaid debt, seemed to overshadow the effect the US economy had on tourism.
In fact, it took two years for the interim government to determine how much debt had actually been accumulated.
The report includes a number of disclaimers in the event the results predicted do not occur. These include more unknowns related to the US economy and a TCI economy, which the report says is best described as “fragile”.