Chairman of the Barbados Private Sector Association (BPSA) Trisha Tannis has pushed back on an economist’s contention that business was withholding support for major capital projects.
Responding to economist Professor Justin Robinson’s concerns about a decline in project financing by local investors, Tannis disagreed with the characterisation of businesses “holding back”, emphasising the economic impact of the COVID-19 pandemic on the private sector.
She suggested investors were cautious given significant losses and the private sector was still navigating the challenges of the economic environment, cautiously recovering from the pandemic’s financial impact.
Tannis highlighted the focus on rehabilitating the tourism industry and acknowledged the slow recovery for various businesses.
“It’s not a case of holding back,” she told Barbados TODAY. “I think everyone forgets that there was an event called the COVID-19 pandemic. Everyone seems to have forgotten that the economy lost between 16 to 20 per cent of its value and the government didn’t lose that by itself, the private sector was definitely there and would have felt the impact.
“Basically, the private sector is now slowly rebuilding. Truthfully, tourism is possibly the sector that we put a lot of our attention to in terms of rehabilitation, for obvious reasons. There are several other sectors in Barbados and obviously, the government would not be expected to support them all. But this has been a very slow recovery period for several businesses. So I don’t know that I agree that people are holding back. I think that you have to be very cognisant of what happened during the [heightened period of] the pandemic. Governments tend to be a lot more resilient than businesses and, therefore, it may be a case where the average domestic investor may not have the wherewithal to be able to invest in a major way.”
The BPSA chairman added that business people were being cautious and given the circumstances, it was understandable.
“Like every investor who has lost significant value, there is understandable caution and you must understand that they have lost investment value for the last three to five years. Therefore, the large investors that you may be referencing that are carrying the weight of the overhead burden in the private sector may not have the wherewithal that you may think.
“Funny enough, there may be more liquidity at the domestic level in commercial banks than there may be in large corporate [institutions]. Once you take out the hotel sector, once you take out the banking sector and the telecommunications and other sectors that tend to be a lot more resilient, what you do have is the majority of the economy that is slowly recovering from the impact of the events in 2020,” she contended.
However, Tannis said there may be an opportunity for local investors to regain confidence through partnerships with commercial banks, but that would depend on the attractiveness of an upcoming venture or project.
“We do have much-touted accumulation of liquidity in the commercial banks. Banks do need to lend that money out. We need to find viable ventures to do so that are gonna give them adequate return on their investment as with any other private sector investor.
“So what we need to look at is essentially how we create the mechanism that can coax that $40 billion of the commercial banks into viable projects, whether those projects are government projects, whether they’re private sector projects or whether they’re PPPs [public-private partnerships],” the BPSA head said.
Tannis added that as prospects start to improve, there would be greater participation from the private sector in capital projects.
sheriabrathwaite@barbadostoday.bb
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