Separate Annual Report 2021

14 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | SEPARATE FINANCIAL STATEMENTS 2021 Management Discussion and Analysis (Continued) Other Liabilities Other liabilities increased by $5.5 million (2020 - $1.1 million) or 23.0 percent (2020-$21.5) to move from 24.2 million in 2020 to 29.7 million at March 31, 2021. Equity Total equity which comprises members’ share capital, retained earnings and statutory and other reserves, once significant enough, provides a safety buffer, ensures financial stability and allows for future growth and development. As at March 31, 2021, total members’ equity stood at $173.2 million, up from $169.0 million as at March 31, 2020. The increase of $4.2 million was predominantly attributable to a positive net income impact of $8.0 million and enhanced by growth in share capital of $348.6 thousand, but diminished by distributions to members of approximately $3.6 million. Economic Outlook 2021-2022 Fiscal The Central Bank of Barbados in its April 2021 press release indicated that “uncertainty continues to cloud the outlook for the Barbados economy for 2021”. Additionally, they indicated that “the pace of the global economic recovery is expected to quicken this year and the IMF has recently raised its growth forecast, partly on the expectation of a revitalized US economy and the anticipated favourable impact of the vaccine roll-out across countries”. Notwithstanding the level of optimism for economic recovery, it was further stated that given the level of uncertainty, significant downside risks remain and the global recovery is likely to be uneven. Despite the decline in economic activity last year, predictions are that the Barbadian economy will achieve growth ranging from 1.0 to 3.0 percent. This growth is however dependent on the country’s ability to contain and manage the spread of the COVID-19 pandemic domestically, combined with maintaining targeted levels of tourism activity as more world economies achieve their vaccination level targets. Barbados has introduced a “Welcome Stamp” initiative designed to tap into non-traditional markets which will be critical to rebuilding the tourism sector. This programme offers the potential of converting otherwise short- term visitor arrivals into repeat tourists and investors. To facilitate the ease of business activity, efforts are being made to transition the Barbadian economy to a digital economy. The need to accelerate this transition has been underscored by the economic impact arising out of COVID-19 and more recently the ash fall from the eruption of the La Soufrière volcano. Economic Recovery The re-opening of the economy has been accompanied by general improvements in the areas previously impacted by reduced employment levels. However, as unemployment benefits expire, government will be pressured to accelerate initiatives to drive economic recovery. The government in its 2021/22 estimates provided for a primary deficit of -0.3 percent driven by the fact that reduced revenue, due to diminished economic activity and an expected fall in corporate taxes, would not be sufficient to rebound to financial year 2019/20 levels. Consequently, government will need to rely on the continued support of international financial institutions, with drawdown levels anticipated to be on par with that of 2020. Government is anticipating that the target date for reaching its targeted 60.0 percent debt-to-GDP ratio may have to be extended. However, it is reported that the country has adequate liquidity buffers to meet its external obligations. The country’s financial system is expected to remain stable despite anticipated further deterioration in non-performing loans. The Way Forward As we close out another financial year we consider it prudent to reflect on the commitments we made last year, and in so doing reflect on the successes we have achieved in realizing those commitments. In that regard we have been able to provide access to members to apply for loans online, and at the end of the financial year were well on the way to successfully rolling out our international debit card as promised. Our membership growth continues to be positive but as forecasted current environmental factors continue to place pressure on our financial performance. Similar to last year, the environment we operate in continues to be a challenging one characterized by low rates in our lending and investment portfolios; a feature that has continued implications for our main income streams and overall level of surplus. Challenges notwithstanding, we continued undaunted and over the past year much work has gone on behind the scenes to review, reimagine and roll-out a strategic plan to take us forward through what are constantly changing times. This plan has resulted in the determination of four strategic pillars that will provide an anchor and direction as we continue along the path to becoming the leading indigenous financial services provider in the region, returning value to our members in all we do. 2017 2018 2019 2020 2021 Total Assets 2017 2018 2019 2020 2021 Deposits 2 Deposits