The overriding objective of the fiscal adjustments undertaken since last August has been to arrest the slide in foreign exchange reserves, and maintain a level of reserves sufficient to protect the value of the Barbados dollar. Since January the foreign reserves have stabilised, and we have observed normal seasonal patterns of reserve fluctuation.
There was a small gain in tourism value added, mainly on account of the UK market. An increase in projected airlift from North America holds promise of improved performance in that market in the forthcoming winter season. In addition, private capital inflows have begun to pick up.
Fiscal consolidation measures yielded $51 million in fiscal savings in the April-June quarter. This is a useful start; the economic team led by the Minister of Finance continues to evaluate the fiscal performance, now on a weekly basis, making adjustments to keep on track to achieve the deficit target of about 6 percent for this fiscal year.
The burden of external debt service is low, at 6 percent of expected receipts on the current account of the balance of payments. However, interest expense is high at almost 30 percent of revenue. Efforts to revive revenues should stabilise and eventually reduce this ratio.
Barbados remains a prosperous, resilient and very competitive country. Our level of human development is high, and our index remained unchanged in the last 2 years, at 0.776. In spite of the buffeting the economy has taken since 2008, real output is down by only 3 percent.
The World Economic Forum reports that, compared with other Caribbean and Central American countries, Barbados has stronger institutions, better infrastructure, better health and educational facilities, higher technological readiness and financial market development, and a more efficient labour market. However, productivity growth must be speeded up, in order to improve our competitiveness.
Barbados' competitiveness is enhanced by high end sports tourism facilities, enhancement of the island's cultural offerings and experiences, and the island's network of Double Taxation Treaties. In addition, investment in tourism and related facilities is expected to exceed US$2 billion in the next 3 years.
A number of initiatives are underway by the National Productivity Council, the National Initiative for Service Excellence, and the Social Partners, to address inefficiencies of the government bureaucracy and the work ethic in the labour force, two of the most problematic factors for doing business in Barbados. Technical assistance is being offered for these initiatives by the IDB, the IMF, and other agencies.
Another very problematic factor is access to financing. Reviews are being undertaken of available financing arrangements, including the finance and guarantee schemes of the Central Bank, to improve their effectiveness.
The distinguishing feature of the Barbados brand must always be excellence of service and value for money. This month the Central Bank of Barbados begins a new TV series on competitiveness, which we will achieve by transforming our services from good to great. We already have examples of world-beating performance that we aim to emulate. They include the recent Top Gear Festival, Bajan superstar Rihanna, and other internationally acclaimed performers. Barbados' Social Partnership is widely admired, and enables us to achieve a consensus on economic policy that is the envy of many.
Barbados is a prosperous, competitive, well-run democracy. Barbadians, and our Government, have shown that we are not afraid of tough challenges. The country now has in place the right strategy for our circumstances. It is being implemented with fortitude. It has begun to show results. We know from experience that the way to raise our standard of living is by resolute application of appropriate policies with a view to sustainable development in the long run.
Until next month.