In addition, some state assets have been identified for divestment, creating resources to ease short term financing flows. Some of the challenges being experienced in Barbados are being replicated across the region. Deficits, debt and access to low cost finance are interrelated. It is important for us to recognise that every dollar of the fiscal deficit has to be financed or arrears will accumulate.
Probably, the central bank will have to be able to choose a longer journey back to its target: it will have to accept more disinflation – and for longer – during the transition than it would tolerate in different balance sheet conditions.