8 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED This section of the Annual Report provides a discussion and analysis of the financial position and performance of the Barbados Public Workers’ Co-operative Credit Union Limited (BPWCCUL) for the financial year ended March 31, 2023, as compared to the financial year ended March 31, 2022. The Management Discussion and Analysis (MD&A) should be read in conjunction with the audited financial statements, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Barbados’ Economic Performance 2022-2023 The January to March 2023 Central Bank of Barbados’ “Review of Barbados’ Economic Performance” reported that economic recovery, driven by growth of 6.4 percent, was recorded for the first quarter of 2023 reflecting eight consecutive quarters of expansion. The press release also reported that the economy as measured by the nominal and real Gross Domestic Product, is currently larger than pre-pandemic levels (2019). Macro-economic Developments • The significant driver of growth continues to be the tourism sector, which recorded arrivals that more than doubled the numbers for the same period in 2022, and rebounded to 78 percent of preCOVID-19 levels. • The positive contribution from the tourism sector also drove improved performance of other sectors including the construction and financial sectors. • The unemployment rate was the lowest since September 2007 at 7.2 percent as at the end of 2022, a significant decrease relative to 8.2 percent recorded at the end of 2022 and 14.1 percent in 2021. • The international reserves were reported at a healthy balance of $3.2 billion, the highest on record, a result of the receipts from tourism and the funding disbursements (policy-related loans) from multilateral development institutions (MDIs). 2 ANAGEMENT DISCUSSION AND ANALYSIS s section of the Annual Report provides a discussion and analysis of the financial ition and performance of the Barbados Public Workers' Co-operative Credit Union mited (BPWCCUL) for the financial year ended arch 31, 2023, as compared to the ncial year ended March 31, 2022. The Management Discussion and Analysis D&A) should be read in conjunction with the audited financial statements, which have n prepared in accordance with International Financial Reporting Standards ("IFRS"). bados’ Economic Performance 2022-2023 January to March 2023 Central Bank of Barbados' "Review of Barbados' Economic formance" reported that economic recovery, driven by growth of 6.4 percent, was orded for t first quarter of 2023 reflecting eight consecutive quarters of expansion. press release also reported that the economy as measured by the nominal and real ss Domestic Product, is currently larger than pre-pandemic levels (2019). cro-economic Developments • The significant driver of growth continues to be the tourism sector, which recorded arrivals that more than doubled the numbers for sa e peri d in 2022, and rebounded to 78 percent of pre-COVID-19 levels. Nominal and Real GDP (Jan-Mar) Sources: Barbados Statistical Service and Central Bank of Barbados Management Discussion & Analysis (MD&A) • As global interest rates continue to increase in the international markets the financing and funding issued by the MDIs will become more expensive and therefore non-interest expense and capital spending management will be critical elements of the Government’s focus throughout the remaining fiscal. • The ongoing Russia-Ukraine war, other global frictions and supply-chain disruptions, along with adverse weather conditions which impacted locally produced food crops, all contributed to upward pressure on domestic inflation. • The primary surplus, which is the difference between revenue and non-interest expenditures surpassed the targets set under the BERT2022 IMF supported programme. The fiscal deficit which is the primary surplus plus interest payments was recorded at 2.1 percent of GDP. Financial Sector Developments • The financial system in Barbados continued to be stable with: o Non-performing loans showing a notable decline during the first three months of 2023. o Profitability and capital adequacy being reported as steady, with a marginal decline in liquidity due to a lower deposit base at Deposit-taking Institutions. Liquidity, however, was over statutory requirements. • Local currency deposits decline by 0.9 percent mainly due to large withdrawals by private sector firms, households and public sector entities for foreign payments. • Lower deposit levels resulted in the average interest rates remaining relatively consistent,
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