91 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | SEPARATE FINANCIAL STATEMENTS 2022 BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED Notes to the Separate Financial Statements For the year ended March 31, 2022 (Expressed in Barbados dollars) 64 23. Financial Risk Management, continued Credit risk, continued Our base scenario accounts for the expected gradual recovery of Caribbean economies during 2022-2023. Current volatility of tourism travel, impacted by local and international COVID infection spikes, continued travel and quarantine protocols and adverse travel advisories lend support to the consensus expectation by governments, central banks, the IMF and tourism authorities that full sustainable air travel recovery across the Caribbean will not happen until 2023-2024. Our downside scenario reflects a reversal of tourism gains experienced over the last 6 months and a downturn of all prices, which adversely impacts the import prices of Barbados. Our upside scenario considers a marginal improvement on base conditions resulting from faster-than-expected economic recovery. The forecasts of GDP growth rates were informed by external economic projections of key regulatory authorities. Internal assessment of the level of member resilience The PDs used are specific to the type of loan and automatically adjusted to for the borrowers’ position during the COVID-19 pandemic. This adjustment were reflective of the main economic sector impacted by the pandemic wherein job losses arose. Recent portfolio performance The PD used are specific to the portfolio segments and automatically adjusted to take into account recent portfolio performance. Portfolios which have shown high resilience to the pandemic would have a lower PD levels than portfolio with higher default rates. Changes in scenario design and the weights associated to each scenario All scenarios considered in our analysis include the impact of the pandemic as at March 31, 2022; reflective of current economic conditions. In determining our IFRS 9 allowance for credit losses, we reassessed our scenario weights to more heavily weigh the downside scenarios contrastly to that which was predicted. Since the onset of the global spread of the COVID 19 pandemic, we have reflected continued uncertainty and downside risk of a prolonged recovery by shifting additional weighting to our pessimistic scenarios.
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