Barbados Prime Minister David Thompson Monday revealed plans for a new job stabilisation plan for the tiny country of 270,000 but said domestic taxation would largely be held steady, as he delivered a BDS$3.6 billion (US$1.8 billion) budget in parliament.

The employment programme, which aims to protect jobs, will give employers access to a loan which amounts to the deferral of one year's payments to the National Insurance Scheme.

"Employers must, however, have been compliant as of June 30, 2009 and give commitment to maintain current employment levels for the period of the facility," the prime minister told the House.

The arrangement takes effect July 1, with the amount of the loan repayable over a five-year term at a three per cent rate of interest.

Training and retraining

Thompson, who is also the country's finance minister, said in the coming fiscal year emphasis would also be placed on training and retraining of the workforce, as he warned there was no hiding from the fact that the global recession was negatively impacting the island.

He cautioned that conditions were likely to get worse before they got better.

Tourism was expected to end the year down 4.5 per cent. Unemployment, which stood at 7.6 per cent at the end of 2008, compared to 6.7 per cent one year earlier, is also on the rise.

"At the same time, net capital inflows have decreased, resulting in losses on the net international reserves with the monetary authorities to the tune of BDS$36.4 million dollars (US$18.2 million) at May 6, 2009," said Thompson.

"With the downturn in economic activity and the reduction in net capital inflows, domestic deposit accumulation has been relatively sluggish which, when coupled with waning demand, has led to stagnant private sector credit growth."

Barbados, he said, expects those conditions to prevail over 2009, and is "facing the possibility of dampened economic activity well into 2010".

The Thompson administration is projecting an overall deficit this year of 5.1 per cent of GDP.

The country's debt hovers around BDS$6 billion (US$3 billion), which Thompson described as "troubling".

In response to calls from various sectors for an ease in domestic taxation, the prime minister said stakeholders would have to "hold tight", suggesting that his administration would not be granting those requests.

He, however, announced some relief for the automobile sector, which is reporting a 43 per cent decline in sales, as well as a reduction in the value-added tax charged on building materials for first time home owners.

The cost of some gun licences have gone up while driver's licence payments for the elderly have come down.

- CMC