Persistent financial woes at some key state-owned enterprises (SOEs) are a major risk to Government’s fiscal performance.
The liquidity and cash flow concerns have continued into Government’s new fiscal year, as SOEs faced $77.3 million in arrears, unfunded pension liabilities of $282.7 million and long-term debt liabilities totalling $732.5 million at the end of June.
Government guarantees of $69.4 million in SOE debt were also highlighted as a potential problem.
This challenging position is detailed in the Barbados Fiscal Framework 2026/2027 to 2028/2029.
“Ongoing SOE reforms aim to improve efficiency and reduce fiscal transfers, with restructuring efforts under way for entities such as the Transport Authority, National Housing Corporation (NHC) and energy sector agencies,” said the document, which was laid in the House of Assembly on Tuesday.
“However, fiscal risks persist due to arrears, unfunded pension liabilities and long-term debt obligations, particularly among entities like the Barbados Water Authority (BWA), Sanitation Service Authority (SSA) and HOPE Inc.”
Arrears were the first major cause of concern flagged in the Fiscal Framework.
Of the $77.3 million recorded at the end of June, “$68.9 million, approximately 80 per cent, of the arrears belonging to four entities – National Petroleum Corporation (NPC), SSA, Queen Elizabeth Hospital (QEH) and the BWA”.
“In addition, of the total arrears . . . $34.3 million pertained to entities that were subject to the International Monetary Fund (IMF) Technical Memorandum of Understanding (TMU) and deemed as high risk,” stated the report prepared by the Ministry of Finance.
It noted that the NPC’s arrears “stemmed from liquidity challenges which have occurred due to the company not being able to pass on the increased purchase costs of liquefied natural gas to its customers”.
This situation “has resulted in the company experiencing successive net losses over the last seven fiscal years, 2019 to 2024”.
The SSA’s arrears were primarily due to “timing delays in the remittance of funds collected from the Garbage and Sewage Contribution Levy”.
“The agency was also experiencing declining profitability due to increasing costs of operations which, as a result, was negatively impacting cash flow, leading to an accumulation of arrears,” said the Fiscal Framework.
“BWA’s arrears were mainly due to cash flow issues as the agency was experiencing significant delays in the collection of receivables.”
The borrowed money that Government is guaranteeing on behalf of some SOEs
is also a fiscal concern.
“Guaranteed debt stood at $69.4 million at June 30, 2025, an increase of $13.4 million from the same period in the previous year, due to a disbursement from the Kensington Oval Management Inc. (KOMI) facility,” the Government report stated.
“Guaranteed debt consists of external multilateral loans and one external bond issue secured on behalf of three SOEs – University of the West Indies (UWI), KOMI and Barbados Investment and Development Corporation.”
The Ministry of Finance explained that “the financial situation of several SOEs poses a fiscal risk as the Government’s implicit guarantee of their liabilities may become a reality in the future”.
The Fiscal Framework said this risk “is most significant” for a few SOEs with total liabilities exceeding total assets, making them technically insolvent, namely the Transport Board, CBC, Barbados Tourism Marketing Inc. (BTMI) and HOPE Inc.
Additionally, other SOEs, such as NPC, SSA, QEH and BWA, “were facing liquidity challenges” which were affecting their ability to settle accounts payables arrears in a timely manner and contributing to an increase in pension liabilities.
“Due to the under-performance of the SOEs . . . this presents increasing exposure to the Government as it relates to these implicit guarantees,” the report added.
It pointed out that in the case of HOPE Inc., “it should be noted that this agency has been experiencing recurring annual net losses since its inception in January 2021 to present”.
The third major SOE-related fiscal risk for Government is unfunded pension liabilities. At the end of June, the largest of these were at the BWA, $130.4 million, and CBC’s $47.7 million.
“It should be noted that given these entities’ ongoing fiscal challenges, it is likely they would require Central Government support to address the pension deficits/liabilities at some stage in the future,” noted the Fiscal Framework.
SOE long-term debt is the fourth area of significant fiscal concern.
As of June 30, 2025, their long-term debt liabilities totalled $732.5 million, with seven SOEs responsible for about 90 per cent of the total debt.
The report stated that while the SOEs were meeting their debt repayments, the fiscal risk remains elevated due to the liquidity and cash flow issues . . . for a number of [them]”. (SC)
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