Banner promoting anonymous crime reporting with a phone and contact number 1 800 TIPS (8477), featuring the Crime Stoppers logo and a QR code for submitting tips.

← Back

Your message to the BLOGMASTER was sent

Sen. Darcy Boyce, Minister of State in the Ministry of Finance, Investment, Telecommunications and Energy

Senator Darcy Boyce will break his silence tonight at 7.30PM (VOB Radio). The hosting of a Press Conference at this time when most people expected that the Budget was imminent has come as a surprise to BU. Does it mean that the budget will be further delayed? Perhaps this is an attempt to do some damage control given the recent gaffe by Senator Jepter ‘physical deficit’ Ince. The rise of Boyce over Estwick is also an interesting side issue. We will find out shortly.

To kick off the discussion a recent comment by Conrad should do the trick:

I don’t know how to express this idea properly. It will come across as knocking the government, but if anyone in the government party were to really reflect on it, they will see I am trying to find them a way out before it is too late.

The DLP is a party with a proud tradition for bold policy and honest communication. But it has got itself unnecessarily caught up into a position where it no longer views Government as finding solutions to problems as it did in the 1960s and 1980s, but merely as political point scoring. Political point scoring is the job of opposition and they found one of the best in Hartley Henry at doing it. He is the consummate professional at political point scoring. But he has nothing to offer real, hard, economic problems. Faced with tough economic problems the Government’s response is not to find policy solutions, but to score political points.

Stuart’s contributions is not to float some new ideas or finding ways to communicate the problem to the people, but to say to people “Guard your minds” or “lets not be distracted by people worrying about the present lest we forget about the mismanagement of the past”. These are nice political strokes, but they actually make it harder for the government to actually address real problems, because the political position is that there aren’t problems they can do anything about.

The DLP’s Faustian Bargain with Hartley Henry is that they get into office, but they have no economic solutions to tough economic problems, because Hartley is not about economic policy, indeed, part of his anti-Owen message was an anti-intellectualism and that Owen viewed the society as an economy not a society.

There is no reason why it should be this way. Henrism was merely a device to win power, but the hubris of victory seduced DLP strategists into thinking that Henrism was more than just a political campaign but was actually a coherent set of ideas. It is not. It is an empty vessel when it comes to economic policy making. Economics isn’t everything, it is nothing without societal objectives, but to do away with economic ideas at a time like this and rely upon buffoons like Ince is dangerous.  It is like having a heart operation but saying that because doctors make lots of mistakes we will do it ourselves using our home-bred, god-fearing, commonsense….

The DLP old guard must deject Henry’s anti-intellectualism and become once more the party of ideas. We have a Government caught in the headlights, frozen, and unable to do anything, hiding behind the fig leaf of it is a big global problem and the last lot did a bad job. Two and a half years into our biggest economic challenges and the Government has no fresh, bold, economic ideas and all it can do is maintain that they do not need them. How can self-respecting DLP intellectuals support that? There is nothing intrinsically DLP about that position, it is Henrism, it is not Barrowism. The real choice the DLP have is not between a set of individual personalities, but between someone who stands for Government as Leading with bold economic ideas as Barrow did, or as Government as merely the exercise of power and patronage, with Paris at CBC and Ince at the Ministry etc. Sadly, Stuart seems to have planted himself in the second camp. Maclean and Sealy too. Who is in the first? Estwick? Sinckler? Where are they? What are they saying? Now is the time for them to make some speeches to set out a vision, because we cannot afford another year in the valley of the blind.


Discover more from Barbados Underground

Subscribe to get the latest posts sent to your email.

140 responses to “Senator Boyce Breaks His Silence”


  1. Also not to mention the the major impact it would have on all business and its relations to jobs. I think the lack of purchase by people would be devastating at a time when the economy needs it more.


  2. Maybe its time to drop this pretense of a mixed economy and move to direct state control of the economy i.e. declare Barbados a socialist state.

    Institute (a) an austerity program which would mean lower wages, drastic reduction in things like car purchases, cosmetics, foreign processed food, foreign ready made clothes etc (b) increase local food production and post harvest processing (c) increase local manufacturing i.e import substitution (d) reduce dependence on energy from oil i.e. develop green energy sources and (e) increase popular control of enterprises and popular involvement in decision making.

    Now is the time for the revolutionary vanguard workers party to come forward.


  3. Almost all the commenters thus far under this thread seem to have been terribly side-tracked by the warm over cold soup, the very repetitive, disjointed, theatrical fare of Senator Darcy Boyce; the generally mild innocuous questions of the media representatives present ( Mr. Shawn Cumberbatch attempted to be the exception – Mr. Ellis was the most UNIMPRESSIVE of the lot – seemed to have had a partisan agenda that Miss Mottley would have liked) and by the media event – which itself served to further show the GREAT DISCONNECT between the government and the rest of the country on the question of where the economy is, and where it is heading.

    At this stage, we must point out that this media event -most of ALL – served to show the GREAT disregard for, and the GREAT lack of social sympathy and empathy with, the very harrowing and wretched social and economic conditions of the poor masses and marginal middle classes in this country, on the part of the Senator and all others including Mr. Reudon Eversley.

    Could anyone imagine that at such a time when so many people are suffering financially materially in this country, there was a bunch of discussants – being part of that media event – that FAILED to properly consider and put before the viewing audience in the country the issue of the deteriotating curcumstances of the poor and needy, but who did rather see joy in preferring to intellectualize – though rather poorly – about what are stimulus packages?? about making references to aspects of some so-called Medium Term Fiscal Strategy of this ramshackle DLP Government?? about the opportuneness of reducing the fiscal deficit?? and most perposterously on the part of Ms Geralyn Edward, about some aspects of government economic policy/relationships that may be at variance with the wishes of ALREADY MONIED COPORATES??

    Anyhow, the fact of the matter is that ECONOMICS/WESTERN FINANCE and LOCAL ECONOMISTS/LOCAL FINANCIAL OVERLORDS in Barbados continue to MASSIVELY FAIL the broad masses and middle classes of people of this country and – by extension – the country, or – shall we say – are continuing to help DEVASTATE these segments of people and this country.

    Therefore, the focus of most of these persons who are now using their computer systems to let many others within blogosphere know about what Senator Boyce – AN ECONOMIST – said or what he should have said, what they think about what he said, to inform about what they think about government’s so-called ECONOMIC policy. etc. should INSTEAD have been on using these said computer systems for purposes of trying to realize COMMON AGENDA SETTING STRATEGIES, COMMON DELIBERATION STRATEGIES, COMMON DECISION MAKING STRATEGIES, COMMON IMPLEMENTATION STRATEGIES, among ourselves in Barbados (and beyond) – re the fact that these STRATEGIES must be used in the path toward FINDING VIABLE ALTERNATIVES – AS QUICKLY AS POSSIBLE – TO ECONOMICS/WESTERN FINANCE AND ECONOMISTS/LOCAL FINANCIAL OVER LORDS – that altogether are primarily logically responsible for the deep rooted gargantuan material productive financial problems that Barbados face at this stage and will continue to face in the long term.

    It is so manifestly clear to the PDC and many others in Barbados that there will NEVER be found any short or long term economic/western financial solutions to these massive economic financial problems in our country.

    For, the only short and long term solutions to these massive economic financial problems will lie in many of our Barbadian people accepting and implementing the “right” ideological social solutions to those problems – some of which we in the PDC have long been stating on here and elsewhere.

    Finally, for us in the PDC, it pains excruciatingly to see that ALL of the commenters on this thread have been seen – up until this point in time when we are developing this post – to be on their computers playing with words and distilling emotions about what Senator Boyce stated, about government’s economic policy failures, etc. BUT NARY A COMMENT FROM THEM ON THE EXTREME HARDSHIP – THE MISERY – THE SUFFERING – THE DECLINE IN STANDARD OF LIVING – that thousands upon thousands of the masses and middle classes are faced with at this stage in this country as a primary result of the bankrupt economic and financial policies of BLP and DLP Governments.

    What an awful tragedy!!

    PDC


  4. Thank you for toning down the rhetoric. The plan is to balance the budget within a four to five year period, which I think is actually quite aggressive. Are you suggesting that it is better to balance it more quickly than this, or even immediately, to avoid incurring any more debt.
    =============================================

    Rhetoric suggest opinions not based on fact or opinions that ignore stated facts. Of which I am accused?

    The additional recurrring expenditure will turn up for money next year again. It is obvious that they are not getting the funds for medium term plan as projected. They now put out a bond for 200m US at 7% over 12 years, which is 400m Bds (plus interest makes it around 800m). Plus the other 200m US (400m. )borrowed in June makes it 2.3b in two years ( 1.5 + 400m + 400m). @#@$#@R. What is wrong with this picture? less than 100m invested in prouctive sectors but used to service increased fiscal deficit. Is there anything here difficut for you to understand? I am just checking because we obviously have the mentally challenged among us.

    Right now I would like to hear from Avinash Persaud,and Mascoll.

    Proper use of 2.3b


  5. Bajan Truth needs to shut up! does he think that a stimulus can only come in one way. We need to be innovative and if that is one of the innovative way of dealing with this situation, which we face, what is wrong with that!! he needs to think out of the box!!!


  6. By the way it seems that Arthur and Mottley were right. The money projected did not materialise like they said, hence the 200m bond not mentioned before. Was it that there is incompetence in Min of F ala Boyce and Ince. Or was it a David Thomson HH tactic to mislead the people but they knew it could not be done. The possible answer to that question might be determined by how long it takes to put together a bond and sell it.

    It would seem to me that 2.3b requires a competnet plan to take us out of here. Mor einvestment inproductive secotrs to produce ofriegn exchange, save and make jobs, save firms to be there to use the recovery, corp. tax , VAT. Moderate construction investment plan to bridge while productive secotrs produce the goods listed above.

    What we have is under 100m additional to tourism nothing to other sectors; large construction plan close to $1b bunched up for 2010 generate jobs, drain foreign exchange, VAT; additional jobs in statutory corporations that earn no foreign exchange; carriesup fiscal deficit; drains foreign reserves,must be serviced next year (another 500m). meanwhile jobs and firms lost in the private sector lessening the capacity to respond to a recovery. NUMBSKULLS. tha tis why I said Dacry talking nonsens in an educated voice is what we got last night.

    It makes me so mad I could blow a gasket. I really hope VOb puts together another team to discuss this position outlined by Boyce. it is very lame to me and does not solve our problems.


  7. @Bajan Truth,

    There you go with the heavy rhetoric again. You need to read the Medium Term Fiscal Strategy and the Medium Term Development Strategy and see how much of what you suggest that we do is already in there. Then respond to what is in the plan. The focus now should be on what we need to do to implement the plan, because that is where the tremendous challenge lies.

    However I do not blame you for not knowing what is in the strategy documents (or at least so you pretend). It is the fault of the government – all Ministers and PS’s should be constantly preaching from those documents. Instead we mostly get silence. I am not sure if this is incompetence, ignorance, strategy or what.


  8. @ Visitor
    “Bajan Truth needs to shut up!”
    **********************************
    Bush Tea begs to disagree.

    Even despite the obvious challenges of the current government, it is refreshing to be reminded of the childish, immature rhetoric of the previous administration through Bajan Truth’s contributions……… it helps to reconfirm that Bajans voted correctly last election……least we forget.

    At a time when, (as Crusoe // July 30, 2010 at 5:53 AM so comprehensively sums it up, ) we all need to come together as a country and realize that it is BIM against the odds, we have these idiotic partisan positions from “BLP Truth” that could only be targeted at impressing those really challenged party yardfowls who are still hurting from the decision of the people of Barbados some two and a half years ago.

  9. Wishing In Vain Avatar
    Wishing In Vain

    Simply brilliant Min Boyce brilliance from a brilliant guy.
    More that many can say re Muttley and her harrassment and plundering of the Ministeries she molested during her time as a Minister thank god those days are over.


  10. A sentence for WIV must have a noun , averb and Mia Mottley. He is one sick person.


  11. This is way bigger than BLP & DLP.
    When will the hacks ever see that! Any talk of the dreaded devaluation yet? It is coming as sure as night follows day. What other option when the vast amount of your earnings are in a foreign currency? It is the quickest way to adjust the domestic debt /equity ratio. It is blatantly obvious that Barbadians cannot pay any more in taxes. The cost of living , caused by successive governments excessive expenditure, causing the inflationary spiral by increasing import costs , simply will not allow it. If taxes are moved further we will see a massive slide out of the middle class!
    There is is huge waste, bad capital expenditure, too many social programs that are abused, low production caused by an outsdated philosophy of the major union, all that need to be
    addressed.
    This is not a time for weak ,cliched rhetoric. The moent produces the man and we need a Barrow or an Adams!


  12. @Wuhloss

    The lifestyles of Bajans suggest there is room to tax a lot more. The fancy cars, the high penetration of cellphones, cable, fetting, flying to holiday and spend scarce resources.


  13. @Donald Duck Esq, // July 30, 2010 at 6:27 AM

    “”For the benefit of all, Senator Darcy Boyce is NOT an economist. You should check out his qualifications. Please stop referring to him as an economis.”

    It doesn’t seem as if you heard, read. and/or understood Delisle Worrell’s recent lecture to the BES, about economiists and what they think they know. My conclusion is that being “an economist” (even a one handed one who can make up his mind) is
    no great milkshake! Now a “sheconomist” is quite another ball of wax!

    Please tell us, DD, whether on any set of stylised facts we can conclude that you are not an asshole!

    I G F N!!


  14. I do not know why all the talk about budget. What we need right now is action and a little less talk. The Government is out there working. If you want to know about the policy the Prime Minister has been outlining the policy for a long time. MORE Entrepreneurs, Innovation. Developing a Green economy. What we need is stop hearing all the talk about solar energy and start putting up the panels and tapping into the energy supply. All you people that want a budget just want to spin tot in mud. Stop complaining and belly aching and start doing.

    Think about the foreign exchange we can save if we reduce our dependence on crude oil for power. I wonder if it would reduce production cost. Duh, it would! Then maybe we can get our manufacturing sector up and running again.

    Every time Mia Mottley Open her mouth I am losing confidence in her. First she said that the government plans to finance the deficit with a loan from the World Bank. She wanted to know how that was possible when Barbados does not qualify for World Bank Loans. The minister of state explained why Barbados was not going after the World Bank Loan, simply because in order to obtain the loan Barbados would have to be in an IMF program. Currently there is no need for barbados to go that route. But what it says is that if the situation gets worse and we have to go that route we would also have access to the World Bank Loan. Now why on earth would Mia Mottley want to make that seem like some kind of conspiracy.

    Barbados is in this rut because of all of the ill-advised loans and projects which the BLP cabinet approved. There is no policy statement or budget right now that can correct their mistakes and stop them from occuring. we now have to live with it. All you people who got $25,000 for cutting down an ackee tree if you want a policy statement, “Pay back the money to the treasury ASAP”.


  15. @ Alex

    True, but the ackee tree man sits on the government benches in Parliament lol


  16. The government’s decision to deliver, the night before the final lap of Crop Over,a press conference on the economy was brilliant PR. Last night’s event will get lost in the Crop Over news cycle.


  17. Despite all that has happened to date we continue to allow partisan politics to keep us back. Why would Mottley refer the press conference last night as a national address? It was made clear that Boyce would take question right away from the journalists.

    We need to stop the politics and place country first.


  18. Dear David,

    The question is delivery.

    Everything the Senator said yesterday, could have been said 12 mths ago: Clico soon to start, capital expenditure plans in the works, waste to be cut…..

    In those 12 mths we have had a modest capital expenditure plan, accounting for less than 10% of the increase in public debt. We have had some belt tightening, but with little impact on the final figures. Clico, should have been caught earlier. Once caught, it should have been sorted earlier. The later is has taken the less money there will be to settle the policy holders, while those who got out earlier got more. Will there be any clawback against the insiders? I doubt it.

    So, it is about delivery, and so far every measure of delivery: GDP, inflation, deficit, debt, reserves, tax levels, leaves little room for confidence.

    Lets hope the Government can get the deficit down by targeting waste and fundamental efficiencies in delivering public services, while pushing initiatives to support inward and local investment. I saw no reason to be confident of that last night, but I hope I am wrong.

  19. Donald Duck Esq, Avatar
    Donald Duck Esq,

    The Senator said nothing much that was new. He confirmed that the government’s medicum term fiscal strategy has been dealt a severe blow by the world bank. He seemd to be very please that a 20 year bond issue was taken up so quick. However he does not realise that with a rate of over 7% and there being so much liquidity in the system due to lack of investment opportunties provided by the government to the banks and the private sector there was bound to be a demand.

    The main question is why was the interview not conducted with the acting Minister of Finance.

    Acting PM send someone else to do the government’s job.


  20. @Conrad

    Here is what we know, the days of cheap oil is done. Governments now and in the future will be saddled with a higher cost to manage government. We should be aware that air travel will become more expensive.


  21. Dear David,

    The days of cheap oil have been done since 2006.

    In 2008, the Government removed the subsidy so that higher petrol prices would be passed on to the consumer. They chose not to persist with the subsidy – I think that was the right thing to do, though, perhaps it could have been eased in more slowly and in a more targeted way. However, they cannot say in 2010 that the problem is oil prices. This is just one more attempt of the Government to talk and talk, blame others, all in an attempt to distract us from the amazing lack of action.

    If I was worried about the days of cheap oil being over, I would have got the IDB and World Bank to give me a $200m investment plan of greening Barbados with solar and wind power. They have offered it before and the plan would not only save energy costs, FX and government costs, it would employ some people and get some money flowing into the economy. But, here we are 2.5 years after being in office and 4 years after the era of cheap oil ended, saying, “Gosh boy, tings tough, because the era of cheap oil over, we have to manage this extra burden…….”

    I have just come back from a trip to Brazil and they have all these bright Brazilians who have come back from London and Harvard advising and pushing new ideas. Our cream stay abroad. They scared to come back because we only playing games, we playing politics, we playing at running a government, but we not actually doing anything real.

    Except with Lime, talk is cheap, but its action that will save us, a little planning and pro-activity that will send us back on course….

  22. Flavour of the Month Avatar
    Flavour of the Month

    TO BUSH TEA !

    I am not a yardfowl but you are right , PeopIe are hurting from the decision Bajans made on January 15 2008. You are so right because the first hurt was $108 million in taxes–that hurt bad bad bad. Need I go on ?


  23. @Donald Duck,

    You said:

    “However he does not realise that with a rate of over 7% and there being so much liquidity in the system due to lack of investment opportunities provided by the government to the banks and the private sector there was bound to be a demand.”

    Correct me if I am wrong, but I thought the bond was issued in US dollars and taken up by parties outside of Barbados – therefore what you have said is not relevant unless you are talking about liquidity in the system globally and investment opportunities provided by governments across the world. Also why should the government be providing investment opportunities to the banks and the private sector? I think you got the message wrong somewhere.

    Maybe someone can tell us what interest rates other governments have paid recently for debt of a similar term so we can see if the 7% is a good rate or not.

  24. Flavour of the Month Avatar
    Flavour of the Month

    rock stone !!

    yuh bad !

    how yuh know that about the man ?


  25. Dear Alex,

    You know, you should study the Governors statement and stop just repeating the 2008 campaign.

    According to the Governor’s review of the economy, when the last lot left Government at the turn of 2007/08, the public debt level was 77% of GDP. This is below the average in Western Europe. That 77% included all the off-balance sheet PPP projects like the Prison, ABC Highway, Coast Guard, new Justice Building etc, etc, that the current Government decided to put on balance sheet and having added it all up, the figure was an increase of around $600m to 77% of GDP.

    In 2.5 years, the public debt level, according to the Governor’s review, has risen by $1500m to 97%, which would be up there alongside Greece and Portugal. The $1500m rise has nothing to do with the BLP projects. It has precious little to do with capital expenditure in fact, as this seems to have been around 10% of this figure, this is a rise in permanent expenditure, so much so, that for the first time in our history we are running a persistant deficit on our current fiscal account so that we are borrowing in order to pay for things we consume every day as opposed to investment in projects designed to bring us some longer-term benefit.

    Now, we can blame the global recession and higher oil prices, but they are about making the job of government harder not about removing the power to determine our own fate and set our own policies to ensure that every dollar we spend boosts jobs and investment, that we deliver public services without waste and corruption, so that we can reduce the cost of doing business and boost private investment and jobs. In almost every other country the debt has risen because they have cut taxes or tax revenues have fallen. Our taxes rose by such a large amount that in one of our deepest recessions the Government’s tax revenues are as high as they were. Our deficit has grown because of a monumental increase in spending. This increase in spending is not down in any plan, or estimates debate, it is not a carefully calibrated plan to boost employment and investment effectively and targeted in the best possible ways with positive spillovers for the environment or the most vulnerable etc.

    So now we have the facts straight, lets work the problem together. We need a national consensus to reinvent the way we deliver the public services we cherish in ways that promote efficiency, cost saving and the removal of patronage and corruption. We need a national consensus about how we join other developing countries and routinely grow living standards at 7%-10% and not struggle to get by at 3% growth, and relative decline.

    But we are too busy blaming others or repeating the 2008 election to focus on what lies ahead and how we avoid the second credit downgrade in our history or an IMF program where outsiders decide which of our cherished social programs we keep.

  26. Donald Duck Esq, Avatar
    Donald Duck Esq,

    Brutus

    There were two issues- one local and one foreign. Go do your research!!!


  27. Rock Stone
    It is persons like who will keep the BLP in opposition for a long time. People are having a relatively robust debate; you come and introduce your vulgarity.
    It is persons like you would turn Barbados like Jamaica with its political tribalism, where people kill people because of the party they belong to.


  28. Dear Brutus,

    The following report on Bloomberg, describes what was happening the day after we issued our dollar bond at 4% spread above the yield on US Treasuries and a total bond yield of 7%. It shows that countries in Latin America, are borrowing at a spread of 0.9% above in the case of Chile and 1.4% in the case of Brazil which has the same credit rating as we do. These are bigger countries with more liquid bond markets, so it is hard to compare the levels, but it points out that while our spreads and yields are rising and our credit rating is falling, other developing countries – even those with a massive earthquake – are faced with falling yield spreads and bond yields.

    ………………
    Chile sold its first international bond in six years at a record-low yield as investors demanded less than half the premium on comparable debt from higher-rated Italy.

    Chile sold $1 billion in 10-year notes in dollars yesterday to yield 90 basis points, or 0.9 percentage point, above U.S. Treasuries. The South American country also sold $520 million of bonds in pesos at 5.5 percent, cutting about 60 basis points, or $24 million, from its cost of borrowing in its own currency, Finance Minister Felipe Larrain said.

    The extra yield, or spread, Chile paid for the dollar debt was 0.6 percentage point less than the region’s biggest economy Brazil paid to borrow for 11 years in April.

    “We have examined all the foreign bond sales placed by the Republic of Chile since 1822 and this is by far the lowest rate,” Larrain told reporters in a conference call from New York yesterday. “This is good news for Chileans because it means lower interest rates. Companies will be able to borrow at lower rates, stimulating investment and employment.”

    The yield on Chile’s dollar bonds due in 2013 fell seven basis points to 1.7 percent. Chilean interest-rate swap rates also fell following news of the pricing. The 10-year swap rate fell five basis points yesterday and a further three basis points today to 5.61 percent, the lowest since March 1.

    Moody’s rates Italy’s debt Aa2, a level above Chile, Standard & Poor’s ranks it A+, the same as Chile, while Fitch Ratings grades it AA-, two steps above its rating on Chile’s bonds. Brazil is rated Baa3, the lowest investment grade, by Moody’s and an equivalent BBB- by Standard & Poor’s and Fitch.

  29. Trained Economist Avatar
    Trained Economist

    I saw on Bloomberg that the bond was floated at 7.2%. Thats a pretty good rate I think.


  30. After listening to Senator Boyce last night I am now more confuse than ever.

    The Senator told Barbadians that his government would not be raising any new taxes and I thank God for that revelation because Barbadians cannot bear any more taxes from this DLP Government. He also told us that there would be no further cuts in financial support, transfers etc, to UWI, QEH and other departments. The question is how does he plan on closing the $1.5 billion gap between government’s current revenue and expenditure?

    It is clear to me that this government will be forced to slash workers in the public service in numbers similar to those of the early 1990’s.

    I am unclear as to why Boyce, junior Minister, was sent to deal with such a serious matter when the acting Minister of Finance was in the island and available? From the look of things this government is imploding slowly but surely.

    With the exception of the DLP diehards Barbadians have concluded that they made an error in January of 2008. They can’t wait to see the backs of this grossly incompetent bounch. This DLP Government is a one-term government. I have said before and I’ll say it again the DLP lied to the electorate to capture the government but lies will not help them to keep it.

  31. Trained Economist Avatar
    Trained Economist

    Whats so special about being an”economist?’ The latest nobel prize winner in economics has three degrees in political science, not one in economics. Keynes never had a degree in economics.

  32. Trained Economist Avatar
    Trained Economist

    The figures from the Central Bank reflect revenues and expenditures comparing jan to jun 2009 to 2010. However, the government’s fiscal year runs from April. Therefore, the new fiscal strategy has been in effect for one quarter. The discussion on the Medium Term Fiscal Strategy would be helped if we had figures on revenues and expenditures for the second quarter of 2010 compared to the second quarter of 2009.

    Boyce and the Central Bank governor both point to a stabilizing economy. Whereas there was decline in GDP of around 4.5% for 2009, GDP seems likely to be flat for 2010. While not great, it does point to some stabilization if not a slight recovery.

    The fiscal deficit, especially a current account deficit is cause for concern. However, a key policy question top mind is whether or not dramatic policies to correct the deficit will not endanger the fragile stability or recovery in the economy? Can we discuss why fixing the deficit now through either further deep expenditure cuts or tax increases, both of which could threathen gdp growth, is superior to the more measured approach proposed in the MTFS?


  33. @Donald Duck,

    I stand corrected. Here is what the Advocate reports that the Senator said:

    “Our issue this week of a US$200 million 12-year bond was sold out in one hour by foreign investors and today, our latest issue of local bond issue, a 20-year issue, a seven and three-quarter per cent coupon was sold in a couple of hours as well. So it seems to me that there is a certain confidence by investors that the economy is stabilising and that our projections and approach is a reasonable one in managing the situation.”

    So, you chose to focus on the local bond issue and dismiss the point the Senator was making?

  34. Josquin Desprez Avatar
    Josquin Desprez

    @ Conrad

    Excellent contributions.

    I am no scholar, only a driver. In his contribution, Alex indicated to us that “The Government is out there working. If you want to know about the policy the Prime Minister has been outlining the policy for a long time. MORE Entrepreneurs, Innovation. Developing a Green economy”. As it relates to entrepreneurs, good idea, but I am some what confused, and I am begging any of you out there to please help me understand. I mean, for example, a youngster , for argument’s sake, 22 years old, fresh out of university and has decided to open his own business; but must have a well articulated business plan inclusive of the relevant research and projected financial statements (will have to get at least $4,000 for an accountant to produce such). Assume start-up capital needed is $50,000, so approaches the bank seeking to borrow the desired funds. The loans officer ask for guarantees, collateral etc, he has none. Loan application rejected. What are his other options?


  35. @ Conrad

    So Darcy went and give way the shop – 7% which will cost in excess of 800m up to 1b in interest payments + 400m in principal. Other countries floated bonds at under 1% above the savings rate. We could have offered 5 or 5.5 % and still have it fully subscribed. Does anybody out there need anymore evidence that we have jokers minding the shop?


  36. @Conrad,

    Thanks for the information. I think we can ignore Chile which is an exceptional case according to the extract, but we still compare unfavourably to Brazil. You say that Brazil has the same rating as Barbados, but perhaps the underlying fundamentals of the Barbados economy are not as sound. I don’t know. But I doubt that the rate is telling us anything that we did not already know.

    It seems strange that the local bond is paying such a high rate though.

  37. Trained Economist Avatar
    Trained Economist

    I am really intrigued by the continuing fixation on the 2008 budget, and the pervasive thesis that the current recession is worse because of it.

    On the issue of energy policy, did the administration increase the price of fuel or pass on something closer to the fuel cost of fuel to end users? My sense, is that they did the latter. So is the thesis that the state should subsidize the cost of fuel whatever the cost of that fuel?

    One of the key notions underlying economics is the role of incentives. If fuel is subsidized and end users are paying less than market price what is the incentive to be energy efficient? Would economic theory not suggest that the low price would lead to overconsumption of fuel? Do we really want to encourage that in an economy like Barbados? Can we get a green economy if fuel is so heavily subsidized?

    What might the fiscal deficit on the current account be if the energy policy was retained? Or is the argument that the lower fuel costs would have fueled higher growth and hence higher revenues for govt? While the impact on the deficit of the oil company subsidizing fuel consumption in barbados is rather clear to me, the lower fuel costs, more growth and hence more revenues seems a more tenuous argument ot me. But I am open to persuasion.

    In most economies when there is a large government sector, economists talk about crowding out of the private sector. The thesis is that the large government role in the economy takes capital that would have otherwise gone to fund more efficient private sector activity. Does that relationship really hold in barbados? Is government expenditure in bim really crowding out private sector activity? if the state cuts back its activity drastically (major expenditure cuts) is there a set of crowded out private sector activity to come in and fill the void. if not are we then not courting a worse recession if the state were to step back in the way suggested?


  38. @Josquin Desprez: “…but I am some what confused, and I am begging any of you out there to please help me understand.

    If I May, I’ll try to speak to this…

    @JD: “I mean, for example, a youngster , for argument’s sake, 22 years old, fresh out of university and has decided to open his own business; but must have a well articulated business plan inclusive of the relevant research and projected financial statements (will have to get at least $4,000 for an accountant to produce such).

    From my experience, accountants rarely are able to produce an “articulated business plan”.

    They will charge a great deal of money to produce a spreadsheet which doesn’t actually communicate the plan, and language which doesn’t actually make much sense.

    …and those paying for these services won’t be able to speak to the numbers or the language during the “once in a lifetime” “elevator pitch” (You’ve got 30 seconds to convince me I should invest in you; start your pitch.).

    My advice to this theoretical 22 year old would be that they should learn how to use a spreadsheet and a word processor, and produce their own business plan that they understand, believe in, and can stand behind.

    Then they should go out and “shop around” the business plan they themselves have produced (and can speak to at the deepest levels) to friends, family and “angle investors”.

    For what that is worth….


  39. Oh my Lord! Thanks for reminding me Brutus.

    First it was Jepter Ince refering to a Physical deficit and not understanding the fiscal current account.

    Then it was the goodly Governor, neatly dropping the net official reserves and focusing on the gross level that ignores whether you have boosted reserves because foreigners are investing (a good thing and positive for the net reserves) or because you have borrowed (a bad thing that reduces the net reserves).

    Now we have Senatory Boyce saying the international bond was sold out in an hour which was designed to make the home team feel relieved and proud that people are scrambling to lend to us.

    Er. It was a private placement.

    It was not an auction, or open tender or sale where you make an offer and wait for the bids. There was no “hour”. There isn’t in a private placement.

    In a private placement you have a private agreement where the lead manager goes and speaks to buyers they have lined up privately, and having got people around the table (in this case a conference call) who have agreed to the purchase and seen all the documentation, they then decide exactly how much each gets. If the phone call took an hour it tells us nothing about how long it took to find the investors privately beforehand. And who are the investors and what are the covenants?

    In a private placement you can make changes like increasing the amount or reducing the yield if that is where the demand is. That’s the advantage and it means we got what the demand was. There isn’t some great untapped demand left frustrated at the end of a fixed auction. They could have increased the private placement as much as the demand allowed. Its a private deal.

    The problem with a private placement is that an open sale should have more potential demand from people you dont know and so you get cheaper borrowing. People go down the route of private placements when they cant do an open sale perhaps because investors are not familiar with the credit, there is a special story, or poor liquidity etc, etc. I guess before the blogs our politicians thought they could get away with these little fibs here and there knowing that our tame journalists would accept it all……


  40. Dear Brutus,

    You make a typically wise observation.

    The local bond will pay a higher yield than the dollar bond if international investors believe there is a risk of devaluation.

    The difference between the two yields is effectively the currency risk. Indeed, the local bond probably has better credit risk and better liquidity than the international bond and so if there was no devaluation risk, the local bond should yield a little less than the US dollar bond.


  41. Westbury tombstone

    can you explain the relationship betwween the statement that ” ronald jones is a buller” and voting for the blp?
    does this mean that dlp are bullers and not blp
    explain you got me real confused

  42. Donald Duck Esq, Avatar
    Donald Duck Esq,

    Bajan Truth

    I agree with you when you say Senator Boyce gave way the shop in pricing the lcoal bond above 7%.

    /If he is going to do such things in future he needs to target certain groups who have a greater need for higher returns on the their investments namely the retirees who are now getting less than 2.5% with their savings.


  43. @Conrad,

    Your points about the private placement make sense – we can deduct some points from Senator Boyce for that. If this is the bond that he said was oversubscribed then logic suggests that they could have raised the $200M at a lower interest rate. We need some more information on this.

    However, based on your explanation, since the local bond was issued at 7.25% doesn’t that fix the lower limit of the foreign bond? My sense is however that in the past we were able to get foreign debt at lower interest rates than domestic debt. Was this all concessionary debt from international financial institutions, and is it a recent phenomenon that we have to go to the market for foreign debt?

    And why are interest rates in Barbados still so high? Is this a deliberate strategy of the Central Bank (to defend the exchange rate)? The weighted average deposit rate was 4.07% at the end of 2008 and 2.62% at Apr 2010 (the minimum deposit rate set by the CB moved from 4% to 2.5%). In the same period the weighted average loan rate only moved from 10.25 % to 9.44%.

    Treasury bill yields in Barbados moved from 4.81% to 3.26% (same period); in the US 0.03% to 0.16%; in the UK 1.29% to 0.51%; Trinidad 7.04% to 1.15%; Jamaica 20.87% to 9.73%.

  44. Wishing In Vain Avatar
    Wishing In Vain

    Despite all that has happened to date we continue to allow partisan politics to keep us back. Why would Mottley refer the press conference last night as a national address? It was made clear that Boyce would take question right away from the journalists.

    We need to stop the politics and place country first.

    Not a more true word have you uttered David, We need to stop the politics and place country first.

    And this is directed firmly and squarely on the shoulders of the BLP and Muttley and Owing.

  45. Josquin Desprez Avatar
    Josquin Desprez

    Thanks, Chris Halsall.
    In the absence of your suggestions on finance, how will the government facilitate those willing to start their own businesses? I do not think that a financial institution, whether it is owned by the public or private sector, will finance a venture which in their opinion, may be deemed as not being feasible, nor will they be willing to finance every single person who wants to be a small business owner. What will happen if 200 individuals from a particular area, unknown to each other, try to seek finance to open 200 similar business?
    Therefore, if one of the government’s initiatives is to promote self-employment (the constituency councils have been introducing this in their activities) do you not think that a clearly stated policy should be told to the public instead of just telling us that entrepreneurship is the way forward?

    The truth is that for years many potential small business owners have found it extremely difficult sourcing finance from the banks and finance companies. In the case of the government institutions, the process is slow, and after the applicants who are close to the politicians are processed, the remaining “spots” have to be distributed among the remaining applicants. Many persons are left disappointed and would try to seek employment.

    A policy statement should be made.


  46. Here is Bermuda’s recent issue. Not an apple and apples comparison but the same narrative.

     

    HAMILTON, Bermuda, CMC – The Bermuda government has raised US$500 million in a public bond offering that was six times oversubscribed to help pay for its rising debts. Government will pay a fixed interest rate of 5.6 per cent on the 10-year bonds, or a total of $28 million a year — but it’s a deal that the opposition United Bermuda Party says is bad news for the island’s "long-suffering" taxpayers.

    Originally, the intention was to raise $400 million, but Financial Secretary Donald Scott said the strong global demand, which generated an order book of $2.4 billion, had enabled government to upsize the transaction to $500 million.

    Scott added that the debt sale had attracted 146 investors, 10 per cent of them from Bermuda. The other geographical areas of greatest demand were North America (60 per cent), Europe (20 per cent) and Asia and the Middle East (10 per cent).

    Government faces a debt burden that has soared in recent years and total debt outstanding was $826 million at March 31 this year.

    The proceeds of the bond sale will be used to repay a bridge loan covering a revolving credit facility, short-term indebtedness with local banks of around $140 million and to fund ongoing capital expenditure programmes.

    The bond sale was managed by HSBC Bermuda, the island’s leading bank, and followed a “non-deal roadshow” designed to drum up global investor interest in the bonds.

    This involved a delegation led by Scott, with Assistant Financial Secretary (Economics and Finance) Anthony Manders, Director of Budget Tina Tucker and Economic Adviser Hasan Durham meeting some 35 high-quality investors in Singapore, Hong Kong, London, Los Angeles, Boston, New York and Hamilton earlier this year.

    Scott said the bonds had been priced at the lowest yield ever offered by a Caribbean region issuer in the US dollar public bond market and it locked an historically low interest rate for the 10-year duration.

    “The Ministry of Finance borrowing strategy is set well in advance of a given financial year taking account of long-term capacity to repay debt, the view of debt capital markets, the borrowing requirement signalled by planned capital investment in infrastructure for Bermuda’s sustained future and other important policy factors,” Scott told the Gazette newspaper.

    HSBC Bermuda chief executive officer Philip Butterfield said: “We have heard some under-informed statements about the pricing of the issue, but this is very competitively priced.

    "The pricing is the most attractive (from the seller’s viewpoint) of any comparable jurisdiction that has come to market in 2010."

    HSBC helped the Cayman Islands to sell a 10-year bond issue last year.

    However, the pricing of the bonds had drawn criticism from Acting Shadow Finance Minister Grant Gibbons, who said it was bad news for the taxpayer.

    “The government will undoubtedly spin this issue as a great success as they were able to get sub scri ptions for the full $500 million offering,” Gibbons said.

    “However, in the cold light of day, the community should understand that it’s just more debt and that it will cost $280 million in interest payments over the 10-year life of the bonds.

    “In fact, a number of financial observers have noted that the 5.6 per cent pricing (at 2.5 per cent spread over US 10-year bonds) was at a premium and certainly no bargain to the long-suffering Bermudian taxpayer.”


  47. @Josquin Desprez: “Thanks, Chris Halsall.

    You are very welcome.

    @JD: “In the absence of your suggestions on finance, how will the government facilitate those willing to start their own businesses?

    It is not up to the Government to facilitate this.

    Those that can will.

    @JD: “The truth is that for years many potential small business owners have found it extremely difficult sourcing finance from the banks and finance companies.

    Yeah. And this is news to you?

    @JD: “A policy statement should be made.

    I, personally (and I suspect others), are *so* tired of talk…

    Let’s see some action….


  48. WIV with a noun a verb and mottley. He cannot write a sentence without mentioning Mia.


  49. I back Bajan Truth statements Squarely.

    There are Logical and Factual assessment of the state of affair as it related to our
    current Economic status

    Conrad Assessment is very much on track with developments capturing

    The Political Psychological perspective Very Clear and well

    what I have recognized of late being produced by key official is some thing which can be classified as Data Distortion and Data Deletion

    Reference to Data Distortion relates to the Minister of tourism continuously bragging

    ABOUT HOW Tourists ARRIVAL NUMBERS ARE UP FORM Canada,and the USA

    but not indicating to the Barbadian public that tourism related EARNINGS are down

    the another example were gave By Conrad i.e Senator Jepther Ince.

    Here I refer to Estimate Quotations and the context to the National Debt

    Mascol shown Him up for that on VOB Down To Brass tacks Sunday

    Next is Data Deletion as Has been point out about the central Bank, where the gross reserves are Shown rather that the Net reserves

    Now with Boyce

    More Data Distortion was given ,

    With talk of foreign Investors confidence in the economy base on a one time event of

    a$200million Bond Sale occurring in less than an hour.

    He FAILED to indicate that 7% on the Bond as a rate of return for investors was high and that it made the Bond quiet attractive to Buyers

    Now it has come to light that the $200 million Bond offer was a Private Placement

    Maybe I missed that during the Telecast

    I would really like to read a transcript of the Telecast to see if it was mention

    if not, then it would be other example


  50. Bush Tea impresses easily..no?

The blogmaster invites you to join the discussion.

Trending

Discover more from Barbados Underground

Subscribe now to keep reading and get access to the full archive.

Continue reading