Leading economist Jeremy Stephen urged the private sector to shed its risk-averse culture and invest more boldly, warning that continued reliance on government spending is stifling growth and keeping public debt unsustainably high.
Responding to the Latin American Economic Outlook 2025, published by the Organisation for Economic Co-operation and Development (OECD), Stephen said on Monday that the report’s findings underscored the need for government to prioritise mobilising private investment and to reduce dependence on tax incentives that had lost their effectiveness.
“The report promotes the need for government to treat as a priority the means for local investors, foreign investors and the like to invest either through more innovative means, green bonds and whatnot,” he said, arguing that too much of the investment burden still falls on the State. “If the private sector invests more, the economy grows more. Government doing it, or offering incentives, promotes more often than not lazy behaviour, which might never truthfully allow the economy to explore the way it needs to.”
Barbados’ debt remains unsustainable because private sector participation in growth and investment remained weak, said the economist.
“It can only truthfully change once we are prepared to incentivise the private sector to do more investing,” he said. “Now, I’m not saying that Barbados should become holistically capitalist, because it’s a small, open economy. Small, open economies typically are inefficient. Private sector sources don’t have a lot of resources to take a lot of risk.
“So as long as that remains, you would have a situation where government still maintains a high debt profile. But if the private sector in general becomes prepared to invest more, while bearing in mind, yes, it is a risky environment, then you would see that government’s debt, public debt, may begin to reduce.”
Stephen added that while the OECD report was “not high risk at all”, it correctly highlighted how Barbados could make its growth more sustainable by improving its tourism product and addressing volatility and seasonality in the industry.
“It was saying how people could improve or how we could improve our tourism product in a way that means that we are more sustainable,” he said, though he added that the report “could have gone further when it looks at how you can create other industries as investment targets for the purpose of hedging.”
He pointed to the lack of private initiatives in exploring new tourism markets as a key example of the problem.
“You don’t hear about, for instance, our hotels going on a roadshow paid [for] by themselves to China or the Middle East,” he said. “Government is the one spending our money and going and opening up those markets. In other places, that is not the role of government. Government will create and facilitate an environment, but you’ve got to go after the market yourself.”
He recalled how private sector leaders once took bold steps to open new markets, citing Bernie Weatherhead, chairman of SunGroup, one of Barbados’ major tourism figures.
The economist argued that the absence of a strong enabling environment for business has discouraged risk-taking and reduced innovation across industries.
“There’s not that enabling environment that allows them to go out there and take those risks,” he said.
The OECD report, released last Friday, highlights that Barbados remains heavily dependent on tourism, exposing the economy to external shocks and limiting inclusive growth. It recommends diversification within tourism and other sectors such as creative industries, renewable energy and digital services to build resilience.
It further emphasises that mobilising private investment is key to sustaining Barbados’ production transformation, reducing reliance on government spending, and improving fiscal space.
The report adds that innovative financing mechanisms, including green bonds and blended finance, can help channel resources from domestic and foreign investors while protecting public revenues, and cautions that tax incentives alone are insufficient; a comprehensive strategy is needed to encourage private sector participation in high-value and sustainable sectors.
Stephen said the key to reducing the island’s debt and securing growth lay in redefining the public-private partnership model.
“Once we don’t have what we view as an effective partnership between government and the private sector, we’ll always be in this debt row,” he said.
sheriabrathwaite@barbadostoday.bb
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