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, 2024, as compared to the financial year ended March 31, 2023. 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 2023-2024 The January-March 2024 report of the Central Bank of Barbados’, “Review of Barbados’ Economic Performance”, reported that the economy continued to grow despite global and domestic challenges such as increased interest rates on foreign debt. Geopolitical frictions stemming from conflicts in the Middle East, and the continuing Russian-Ukrainian war along with other global external frictions also placed upward pressure on domestic prices through higher freight, import and transportation costs. Despite these challenges, Real GDP increased by 4.1 percent which was primarily driven by visitor arrivals. The other performing sectors also contributed to the economic growth recorded for 2024 and the current account surplus which increased by $178.2 million during the first quarter of 2024 compared to $71.8 million recorded for the same period in 2023. The debt-to-GDP ratio fell from 119.6 percent to 114.3 percent mainly from the strengthened 2023/2024 economic activity and growth. A Summary break-down of Macro-economic Developments • During this period, the significant driver of growth was the tourism sector which recorded the highest arrivals since the 2019 pre-Covid peak. The increase in airlift capacity and promotional initiatives bolstered long-stay tourism by up to 14.8 percent compared to the same period last year. • The positive contribution from the tourism sector spilt over and improved the performance of other sectors such as restaurants, other food services and recreational activities. The construction sector also benefitted through private and public partnerships with key projects which included the construction of the new geriatric hospital, the roads project from the Mill & Pave Programme, Barbados Water Authority infrastructural works and the World Cup Cricket preparations. • The labour market showed signs of improvement with a decline in unemployment claims from the NISS which remained below pre-pandemic levels. The unemployment rate fell for the third consecutive year to reach 7.9 percent compared to 8.4 percent in the previous year. Management Discussion & Analysis (MD&A) • The international reserves were reported at a healthy balance of $3.2 million or 33.3 weeks of import cover as a result of the receipts from tourism and the incremental funding disbursements (policy-related loans) from multilateral development institutions (MDIs). • As global interest rates continue to trend upward from inflationary pressure, funding issued by the MDIs will become more expensive and therefore noninterest expense and capital spending management will continue to be critical elements of the Government’s focus. • Debt and financing were reduced during FY 2023/24 by $70.2 million from prior FY 2022/23 which resulted in a higher primary surplus. This was achieved notwithstanding the higher debt service due to the higher variable interest rates and the step-up interest rates feature of the restructured domestic government debt, issuances of the BOSS plus bonds and treasury bills. • The Middle East conflict and the ongoing Ukrainian-Russian war continue to cause supply and trade disruptions, and these along with adverse weather conditions all contributed to elevated but slowed inflation rates with a 12-month moving average of 4.8 percent and a point-topoint average of 4.2 percent as at the end of February 2024. In comparison, these fell from 5.6 percent and 6.5 percent respectively from the prior February 2023 period.
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