Experts in the Ministry of Finance are raising a fiscal red flag on eight cash-strapped state-owned enterprises (SOEs), warning that they are likely to put Government’s finances under pressure over the next three years.
The Fiscal Risk Statement (FRS) 2026, prepared by the Fiscal Risk Unit (FRU) of the Ministry of Finance, found a 50 per cent to 100 per cent probability that Government will have to bail out the Transport Board, Hope Ownership Providing Energy (HOPE) Inc., Queen Elizabeth Hospital (QEH), Sanitation Service Authority (SSA), Barbados Water Authority (BWA), Caribbean Broadcasting Corporation (CBC), Barbados Tourism Marketing Inc (BTMI), and Kensington Oval Management Inc. (KOMI) in that period.
“Persistent liquidity shortfalls, recurring operational deficits, and weak balance sheets across several SOEs continue to pose material risks to government finances and remain the primary source of immediate fiscal exposure,” the FRS, which was laid in Parliament last week, advised.
The report used the Transport Board’s ongoing financial difficulties to highlight the major fiscal challenge SOEs posed for the public purse.
“The Transport Board’s 2026/27 financial position places it firmly in the very high-risk category. Its debt-to-equity ratio of 1.4, driven by total liabilities of $135.5 million and negative equity of $99 million, reflects severe balancesheet erosion and an unsustainable capital structure,” the document noted.
“Negative equity signifies an immediate inability to absorb operational losses without Government intervention.”
A fiscal risk heatmap was used to determine potential exposures to Government’s finances by rating each risk according to fiscal impact, and the likelihood that bailouts would be needed.
The eight SOEs mentioned were all in the red zone, which “indicates high risk and requires urgent action”.
“The heatmap identifies several significant mediumterm risks that could place pressure on the government finances over the next three years,” the FRS states.
“Foremost among these are the potential bailouts of SOEs such as the Transport Board, QEH, HOPE Inc., SSA, BWA, CBC, BTMI, and KOMI, many of which appear to have a probable likelihood of realisation due to one or more of the following: ongoing liquidity challenges, thin capitalisation, and operational deficits.”
The report said that “in assessing financial risks within SOEs, profitability challenges often emerge first, which can subsequently lead to liquidity pressures and, if unaddressed, solvency problems”.
Financial strain
“SOE risks were identified through the analysis of financial statements and key ratios with particular attention given to three core dimensions of financial performance: liquidity, solvency, and profitability,” it noted.
The report added: “The Transport Board continues to exhibit severe financial pressure, while the Barbados Tourism Product Authority (BTPA) faces the most acute distress among the group.
“The CBC shows deep financial strain driven by persistent operating losses and high fixed costs. KOMI also reflects significant, though comparatively moderate, distress, largely due
to its volatile, eventdependent revenue streams.”
The FRU did testing “to assess the financial stability of the 37 commercial SOEs and estimate the likelihood of bankruptcy within a two-year horizon”. The Transport Board, BTPA, CBC and KOMI, all with severe balancesheet erosion, ongoing liquidity pressures, and structural financial instability, were all in the distress zone.
“These SOEs are thinly capitalised, with equity levels that are insufficient relative to their liabilities, and that they are consistently generating year-onyear losses,” the report shared.
“Entities with these characteristics pose a heightened risk of fiscal spillovers, as they are likely to transfer financial pressures to the Government budget. Consequently, these SOEs are expected to remain solvent only with continued and sustained Government support, including periodic bailouts or other forms of financial intervention.”
Two supplementary resolutions totalling $562.5 million, which the House of Assembly passed on Wednesday, included financial support for some of the SOEs mentioned in the FRS.
There was $9.43 million to cover the Public Affairs Department’s indebtedness to the CBC for the period July 2024 to November 2025 and to facilitate severence payment, payment in lieu and compensation for eligible contractors.
Also, $12 million was provided to cover the deficit of the Transport Board, while another $65 million was “required for salaries, operational expenses of the QEH”.
At the end of last year, there were 55 SOEs entities, down from 58 in 2019 following amalgamations, mergers and closures. Of the 55, 37 are classified as commercial, while 18 serve public service or regulatory functions and are designated as noncommercial.
The report said that “through restructuring, cost containment, improved financial management, and operational reforms, Barbados has already reduced SOE losses substantially cutting net sector losses from $529.1 million . . . in fiscal year 2021/22, a period that included the COVID-19 related fiscal pressures, to $214.6 million . . . in fiscal year 2023/24”.
“SOE risks are being reduced through governance improvements, operational reforms, and cost-containment measures. Institutional risks are mitigated through strengthened forecasting, conservative revenue assumptions, improving data quality, and enhancing interagency coordination,” it explained.
Regarding the Transport Board, the report noted: “Government . . . is implementing a comprehensive restructuring of the Transport Board, which includes its transition into the newly established Barbados Mass Transit Authority (BMTA).
“The BMTA is designed to amalgamate part of the Transport Board and the Transport Authority, with the primary objective of reform, investment and work enfranchisement. The reform also aims to enhance revenue generation, streamline expenditure, and improve operational efficiency.” (SC)
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