Government of Barbados Voluntary National Review (VNR)

Introduction

In July 1937, labour protests in Barbados marked the beginning of a socio-economic change. In December 1951, we held a general election for the first time under universal suffrage, and in November 1966, we raised our flag for the first time as an independent nation. These moments sparked a process of Barbadian nation-building and development, which sets among its core principles the empowerment of our people to live the lives they choose and value. They are the same principles of global and national, social, economic, and environmental justice that drive the 2030 Agenda for Sustainable Development and the Sustainable Development Goals.

 Development is a journey, not an exercise, not a moment. The sustainability of that journey is more onerous for small, island developing states. SIDS are intrinsically more vulnerable to a lack of diversification, to experiencing industries fall away after decades of dominance, changing trade agreements and supply chains, and the risk of wipeout from a natural disaster. The hurricanes that pass through our region every year dwarf Barbados. As a result of these vulnerabilities, small island developing states experience extreme cycles of success, collapse and recovery. Our high measures of Human Development or GDP do not tell the story of these cycles, and the vulnerability and fragility of the current development path.

In 2018, the Government of Barbados announced and began implementing the Barbados Economic Recovery and Transformation (BERT) Plan to restore economic and social stability and place the country on a path of sustainable, and inclusive growth. BERTs transformational anti-poverty and sectoral strategies are aligned with the Sustainable Development Goals. These strategies support greater equality, stronger social protection, broader access to economic advancement and enfranchisement and more investment in climate-resilient, carbon-neutral, and inclusive growth.

The BERT plan, which received the backing of an IMF Extended Fund Facility in October 2018, is unprecedented internationally in the degree to which it shares the burden of adjustment and reform, shifting it from falling too heavily on labour and the most vulnerable, to capital and the visitor economy. Following a successful domestic and external debt restructuring, changes to the revenue and expenditure models, increasing health, education, and social protection investments began to bear fruit in key social and economic indicators included in the SDG Framework.

Then, COVID-19 hit. Governments were called upon to completely reprioritize and reorganize expenditure, forge new supply chains, and develop new financing structures in response. Overnight, we have seen the sharpest, most profound, and most far-reaching cessation of economic activity since the Great Depression of the 1930s presenting, beyond the disease itself, a further threat to lives and livelihoods. Globally, there was a sudden stop of economic activity. Billions were sent home from work, and millions laid off. Families were tipped into poverty. Decades of global human development progress have been put at risk.

Travel, and trade-dependent states were hit hardest; their response held back by high indebtedness or not possessing a reserve currency they could print. Barbados fit that bill too perfectly. In the first 2 months of the fiscal year Government’s revenue declined by 31% and expenditure increased by 21%. In three months 38% of those enrolled in the national social security system had made a claim for unemployment. Unemployment in the informal sectors of the economy were likely to be higher still. Our systems were not designed for this kind of systemic collapse of economic activity. COVID-19 has been a monumental test of development in Barbados and everywhere else. It will reset every development baseline. We had to respond with an immediate and sharp scaling up of social protection investment and fiscal and financial inclusion policies that will also impact our SDG targets.

My intervention this afternoon will focus on the adjustments COVID has caused us to make to our own development path with respect to key goals, and to the global partnership for development.

COVID-19 revealed four significant gaps in our social protection framework. We have one of the most comprehensive social security systems for any developing country. But, it is designed around a traditional view of work, and not for the more flexible world of work, of the increased number of selfemployed, of small businesses, of the part-time or commission-paid worker. Many of those who most needed support were not part of the social security system.

Secondly, survival and prosperity are realized on the basis of care work, whether in the formal market or unpaid care in the household economy. Recuperation, homeschooling and other socioeconomic activities saw a move from the public to the private that is not without cost. That thing we alternatively call ‘social fabric’ or ‘resilience’ does not happen by magic or by accident. The resilience of individuals, households and countries is not free: it requires investment. Women and men who do care work in homes need investment in the things that make them productive: whether basic goods like water or internet connectivity to digitally access services. And those who do this work in the formal market must be appropriately remunerated for the work that keeps entire societies turning over. As long as the care economy remains largely underpriced and undervalued, it becomes a thinner and thinner buffer to crisis, less capable of playing its critical role of raising our children in and with love, and fostering their ability to care, so that we can have the best chance to reject all forms of violence.

Thirdly, we learned that resilience requires a population that eats fresh foods and eats well, not fast, convenient and nutritionally poor foods. Resilience is connected to health, which is connected to nutrition, which is connected to fiscal policies that support bringing agricultural lands and farmers back into production rather than buying more medicines for NCDs alone.

Fourthly, individual vulnerability to COVID-19 lay on the same fault lines as inequality. No amount of resilience and development will prove sustainable if we do not permanently correct these inequalities. And we make a deliberate policy choice to continue to close the circle of enfranchisement, in this instance economic enfranchisement for that has been the primary focus of post-Independence Barbados.

New Initiatives and the SDGs Social protection, access to economic resources and basic services (Goal 1)

 Barbados has an extensive social safety net which we have ring-fenced from expenditure cuts and established a floor on spending. COVID allowed us to see how people experience deprivations not just at one moment but through their life cycle. While traditionally people have moved in and out of eligibility for cash or in-kind transfers, the pandemic has revealed different groups that need to be better served by the social protection system, and the different kinds of instruments and services required. In response, the Government had to come up with new, immediate tools quickly:

We put an additional $20m into a Household Survival Programme, allowing for a 40% increase at the Welfare Department in cash benefits to families and individuals already enrolled, as well as support to households in a new Adopt Our Families programme that do not receive unemployment benefits and that as a result of the pandemic have no employed members of the household. This new programme has also been supported by civil society and the private sector.

We have introduced a new Business Interruption Benefit for the self-employed who are not eligible for unemployment benefits. We have so far paid out $2m to 900 claimants.

We have introduced a small business wage subsidy for the period of the lockdown and restricted movement, where we subsidise up to 5 workers of a small business.

During COVID, we embarked on an emergency programme to re-connect those without water supply due to their inability to pay. This is an expansion of our policy where we are now seeking finance to replace over 5000 pit toilets with flushing toilets inside homes. A progressive tariff system varies rates of large and commercial users to subsidise small and household users of both water and electricity.

Reducing mortality from NCDs through prevention and treatment and improving health coverage (Goal 3).

We have devoted more resources to public health. Apart from re-purposing an abandoned Naval Base as a new medical facility to directly deal with COVID so we would minimize the exposure of our regular main hospitals, a particular focus was our network of free polyclinics. They are on the front line of trying to prevent and treat non-communicable diseases. We have put resources into expanding access to these services by introducing 24-hour polyclinics and increasing the number of nurses.

COVID brought home that resilience is not just about buildings but lives and livelihoods. We accelerated our Farmers Empowerment and Enfranchisement Drive or FEED as we appreciate the need to build the immune systems of our people. This is a three-year programme designed to support food and nutrition security by bringing 750 acres and more people back into local agriculture.

 Fiscal policy has an important role to play to support public health beyond expenditure. We are examining ways to incentivise prevention with our Wealth for Health Plan. Before COVID, we were also establishing a dedicated team of community nurses to monitor and work with the 2000 patients most affected by NCDs in their homes.

Access to skills, decent jobs, and entrepreneurship (Goal 4)

To support individual development and freedom, we are investing heavily in skills training. We recently launched a $10m a year National Transformation Initiative, a national effort in broad-based training and national consciousness engagement in a range of accessible formats for those in work or looking for better work. We have also in 2019 established a Barbados Youth Advance Corps for ultimately 1000 students per year for 2 years, to expose them to a structured, post-secondary programme focusing on life skills and a range of vocational skills, and thereafter job experience. We have paused the intake at 500 as a result of the Pandemic.

Indeed, before COVID hit, we were working on a new $40m modernisation programme designed to improve access to government services 24 x 7. A large part of this Programme includes digitizing existing records so as to expedite our move to an E-Governance platform. We are well on the way. We are working as a paperless Cabinet and are in the process of extending it to all Ministries and especially so, in areas where the public is being served, like applications for Certificates of Character. We have recently amended the procurement associated with this Programme to give priority in training and employment to the newly unemployed.

Access to finance is critical. We have a number of measures to support entrepreneurship including our $10m Trust Loans Scheme. The Transport Board recently created a programme where individuals could bid for bus routes. In parallel, we developed our Programme of lending to small businesses, by over $2m to support bus drivers buying their own buses.

Increasing water-use-efficiency and reducing water scarcity (Goal 6)

 Barbados is a water-scarce country and is experiencing a severe drought, driven by the climate crisis, that has drained the reservoirs. We have a multi-pronged approach to addressing this, which we have been pursuing during COVID. We are investing heavily in mending the network and reducing the substantial loss of non-revenue water. We are installing solar-powered pumps to improve resilience and lower energy costs. We are optimizing our use and cost of desalination of the brackish water around our coast.

Increasing substantially the share of renewable energy in the energy mix, (Goal 7)

We have a 100% fossil-fuel-free target for 2030. But progress was slow, with only a tiny proportion of the grid being powered by renewable energy. Given the tremendous expenditure associated with water augmentation and distribution, we have reserved 15% of total renewable energy production, (savings/income from the production/sale of electricity) for the water sector, 5% for the Third Sector and 5% to guarantee reliable affordable access to public transport. COVID brought home the need for greater resilience in our economy through more diversification and energy security. Consequently, we have been developing with the Fair Trade Commission, a new pricing framework. We will publish prices that will attract investment for a range of renewable energy types and sizes. This price will adjust down in a transparent, predictable, and limited way, if the investors end up with above-normal returns. This approach has already attracted interest. We are currently in the middle of a regulatory approval process for plants that will increase our supply of renewable energy threefold.

Promote sustainable tourism that creates jobs and promotes local culture, (Goal 8)

The effort to improve the integration of tourism into the broader economy and its sustainability has a long history, but not much to show. In three months, COVID has probably done more to get hotels and restaurants to work more closely with local farmers than most past initiatives. But we have recently made a couple substantial changes that are making a difference and will reinforce current trends. We have introduced the idea of planning gains where new hotel developers need to put aside a percentage of construction costs towards materially supporting the local community, like rebuilding a local school and playing fields, and contributing to the local infrastructure and local art culture. There are also new requirements for ensuring that a significant proportion of employees come from the surrounding area.

Adopt fiscal, wage and social protection policies that achieve greater equality, (Goal 10)

 In further measures to directly attack inequality, we will broaden our minimum wage requirement to all sectors of the economy, from just distributive trades and domestic help, and will raise its level by over 30%.

Most investments in our country are privately held, and the ordinary public does not have access to investment opportunities. They are forced to put their savings into very low-yielding instruments at the bank. We are trying to better democratize the ownership of assets. We now require those investors who benefit from any public financial incentives to offer shares to the broader public within a few years of operation. In support of this, we have approved new low-cost digital exchanges and widened the type of investments that insurance companies and credit unions can own. We are also putting minimum local ownership requirements of 30% around investments in strategic industries like renewable energy and medical cannabis.

Strengthen resilience and adaptive capacity to climate-related hazards and other natural disasters, (Goal 13)

 Climate change has worsened drought conditions and increased the risk of devastating floods from a hurricane. We have so far been lucky with hurricanes. Our neighbours have been hit by storms that wiped out over 100% of GDP. Luck is not a strategy, it cannot be expected to hold, and the new hurricane season has just started. And there are other natural disasters to contend with too, such as a global pandemic. We have a multi-dimensional strategy. We have revamped and tested our natural disaster management protocols. And we are supporting and enforcing better building codes and standards. We are now the world's leading issuer of bonds with natural disaster clauses. When an external agency declares a natural disaster has hit, interest and principal payments are suspended for two years. We have signed up for contingent credit lines offered by our regional development banks, and when these two things are added up, we will have access to close to 20% of GDP for 2 years when a disaster strikes. We encourage the use of these natural disaster clauses for all to avoid a disorderly unraveling of legal obligations. And for pandemics too.

Conclusion and Partnership (Goal 17)

We take responsibility for achieving sustainable development within our country. We are standing up and pressing forward. But small economies are necessarily plugged into the international system. We import much of what we consume, we earn our daily bread by exporting to the world, our financial system is foreign-owned. We are the canaries in the mine of the international system. Today, for several reasons, the international system has become a source of risk. Global pandemics, climate change even the explosion of non-communicable diseases are problems with external origins and solutions that require international agreements. We need effective international agreements that cap and lower global temperatures; that limit the spread of pandemics, supporting nutrition, and energy security. But we also cannot afford wait. Especially as a middle income country, we need our vulnerability to be recognized, and access to financing to help us build resilience to these external risks. Let us be clear – we earn too much to be considered poor and too little to be heard in order to secure policy space.

We call for more significant mobilization of concessionary finance, especially for middle income countries. The UN SG has more than once recognized the vulnerability of our countries. The time is past due for objective measures of vulnerability to be included in determining access to concessional funding. And we say that if ever there was a reason for an expansion of global liquidity through the issuance of SDRs to offset the destruction wrought by a worldwide pandemic or climate change it is now.