Government Faces Budget Challenges as State-Owned Enterprises Seek Financial Assistance

Government may have to allocate millions of dollars to continue bailing out some cash-strapped state-owned enterprises (SOEs).

A new Fiscal Risk Statement from the Ministry of Finance says there is evidence that a number of SOEs, including the Barbados Agricultural Development Marketing Inc. (BADMC), the Caribbean Broadcasting Corporation (CBC) and the Transport Board are likely to be short of cash and other liquid resources needed to pay their debts this year.

The authorities say this means that “given the traditional reliance on Government to settle arrears of the SOEs in times where they have been cash-strapped, there is a high risk that these entities may require unbudgeted subventions during fiscal year 2024/25”.

In recent supplementaries approved by Parliament before the last financial year ended on March 31, $4 million was allocated to settle outstanding arrears of the Transport Board, and $2.5 million was voted “to meet the expenditure for the payment of pensions and operations of CBC”.

There was also $4.6 million for the BADMC “to enhance water solutions under the [Farmers’ Empowerment and Enfranchisement Drive]

programme by expanding the irrigation networks including pumphouses and distribution piping at Wakefield, Spencers, Bath and Mount Poyer”.

Weak revenue growth

In the 2024 Fiscal Risk Statement, which is a requirement of the Public Finance Management Act of 2019, the Ministry of Finance said “weak revenue growth for most commercial enterprises and a high reliance on Government subventions to meet operating expenses have meant consolidated net losses of commercial public enterprises before subventions”.

“A number of SOEs have been deemed insolvent as current assets are unable to cover liabilities. Additionally, some commercial entities’ revenues have not fully rebounded post peak pandemic,” it reported