Submitted by People’s Democratic Congress (PDC)
For, on Tuesday, 17 July, 2012, Standard and Poor’s – one of the three major international credit rating agencies – downgraded the Barbados Government’s financial credit rating. The Government’s foreign currency bonds status has reached junk status – from BBB-/A-3, to BB+/B, in the S&P’S rankings.
But, the PDC is not surprised that this has come about. As that, ever since the Barbados government’s last effective downgrade by Moody’s (another of the three major international credit rating agencies) in 2011, we would have been forewarning many people many times on here – on BU – and in other fora – that the Government of Barbados international creditworthiness would have been deteriorating at such a fast rate, that it was only a matter of time before it was going to be downgraded again by anyone of these credit rating agencies.
Well, that is what just happened on Tuesday – a day when, too, the Nation Newspaper was reporting big and bold on its front page, how the main public sector union – the NUPW – was bombastically ungraciously pressing for a 10% wages hike for public workers.
Nevertheless, what this last downgrading has emphatically said, et al, is that for over the last 25 years or so both DLP and BLP Governments have been grossly and recklessly mismanaging the material financial affairs of this country.
From the time the Owen Arthur government took office in this country in 1994, 18 years ago – it was very clear that this was the position the country was bound to come. So, not constrained by the altruistic nature of the office of Prime Minister and Minister of Finance – the then noviciate Mr. Owen Arthur took it upon himself to carry the ‘triumphantilism’ of he and his party’s winning the 1994 general election further by soon engaging in an unwanton, unnecessary massive expansion of the public sector of Barbados (employment in the public sector employment was estimated to have at one point swollen from 21.9 of the entire labour force in Barbados in 1994, to 30% of that said entire labour force in Barbados, at the end of September 2004); several ministries, government departments and statutory corporations were foolishly inspired and/or inaugurated by Arthur (including the Ministry of Social Transformation, the UDC, RDC, FTC, the Poverty Alleviation Bureau. etc.), and public sector transfer costs (taxation) were estimated to have increased significantly primarily on purely political grounds.
Especially with the VAT coming into existence in 1997, the Owen Arthur government doubled the reported total yearly amount of EVIL WICKED TAXATION THEFTS, moving them from a reported BDS $ 1.0 billion in 1994 to BDS $ 2.2 billion in 2007, mainly to support his political financial squandermania and excessiveness and some of his downright political objectives, for example, HIS ILLUSION OF CREATING 30 000 jobs, and the nebulous POLITICS OF INCLUSION. Ironically outlandishly enough, in 2012 though, this same political nuisance Arthur can be found to be accusing, however rightly, this present Stuart Administration of increasing TAXATION to support the very unsustainable untenable political goal of not sending home a single man or woman from the public service at this very juncture.
Some BU readers may well remember the PDC article we did some time ago on BU about certain types of empty insincere recurring words, themes, and discourses that many DLP/BLP parliamentarians/candidates in Barbados deceitful use or not use, at some times to help secure cheap political points over one another in those or other times, even though – whenever the facts have been ascertained – they prove that some of these same people who use these very words, themes, etc. would have earlier themselves indulged in similar things behaviors as those ones that they would then be later accusing some of the other political figures of doing or not doing. Well, Arthur’s case above is a dastard example of that.
Anyhow, what is most reprehensible about that public sector expansion and duplication and wastage of resources that Arthur did during his years of gross misrule – is that they started to take place only within a couple whiffs of the Sandiford Administration having managed to substantially complete the structural and stabilization program it had agreed with the IMF in 1991/2 – and which itself would have realized substantial reductions in the size of the public sector then. For example, the work force of government was reported to have fallen from 24.6 per cent of the entire labour force in Barbados in 1991, to 21.0 in 1993. There was also realized the restructuring of many public enterprises – hence, for example the Barbados Transport Board proceeded to go the route of conductor-less, fare-box buses. Also some enterprises were merged with one another – hence, the BIDC, BADMC.
There was also some measure of privatization of government enterprises – Arawak Cement Plant – or divestment in private sector companies – BET, BARTEL, and in the same Heywoods Hotel that has recently been in the news). Mr. Sandiford (now Sir Lloyd) and the IMF had instituted an 8 % pay cut for public workers, had reduced the size of the fiscal deficit of the Government from BDS $ 248 million to BDS $ 54 million, had reduced the size of the current account deficit on the balance of payments, from BDS $ 317 million in 1992 to BDS $ 171 million in 1993, and had been forced to cede greater political material space to the much more efficient private sector to operate in. ALL OF THESE MEASURES AND MORE IN EXCHANGE FOR BORROWING AN AMOUNT IN MILLIONS OF DOLLARS FROM THE SAID IMF!
Of course, the Sandiford Government and the majority of the people in Barbados at the time had to pay a very heavy political, material and financial cost then in 1991/2 and later on for the gross and reckless incompetence of the same Sandiford Government in 1989/90 – part of this said cost being the same draconian DLP Government/IMF program.
Anyhow, back to Arthur, Arthur engaged in the highest public sector borrowing this country would have ever seen at the time, crassly moving the gross government debt from BDS $ 2.4 Billion in 1994 to BDS $ 5.4 Billion in December 2007, and thus skyrocketing the estimated government’s net claims on the public sector to as much as negative half a billion dollars in 2007. Arthur was warned by Standard and Poor’s and the IMF about the adverse consequences for the creditworthiness of the Government of this country when he and the BLP undertook massive large-scale borrowing for the ICC World Cup and its associated projects in2005/7 – chief among them the Kensington Oval Redevelopment Project.
Also, Arthur approved so many other non-income/non-revenue generating projects at such a fast pace and in such a clustered way, and esp. through the use of the BOLT system, that the rising astronomical levels of public sector debt that will incur will serve to drown out many of the productive efforts of many of the people of Barbados for some time to come. Hence, some non-income/non-revenue generating projects and, too, some of which involve very costly repayment terms are the Dodds Prisons, the Halls of Justice, the widening of the ABC highway along a certain stretch, the road rehabilitation project that started from the bottom of University Drive and that ended at Garrison, the NHC Warrens Office Complex. Also, the government’s off budget borrowings rose to staggeringly high levels, and the NIS became another political means for financing some of the borrowings – Hence the Airport Redevelopment Project funding, the Coast Guard Project. (Again, this Arthur now pillories this present government for doing similarly). In 2006 the deficit on current account of the Balance of Payments moved from a surplus in BDS $ 269 million in 1994 to a deficit of BDS $ 664 million in 2006.
What was very unfortunate about such instances was that Arthur did do so many and more dangerous and wicked things to the political economy of this country, despite his saying in coming to office in 1994 that under his leadership there would have been a private sector export led political economy and else in this country.
Well, too, from the time the David Thompson Administration took office in this country in 2008, it became starker than before that the government of Barbados was going sooner rather than later to reach junk bond status on the assessments of the worsening of the creditworthiness of the Barbados government by at least one of the credit rating agencies. For, the late David Thompson further unwantonly increased employment in various areas of the public sector – e.g. scores of people were employed by an expanded Drainage Unit. He incorporated the very unnecessary and useless Department of Constituency Councils and Constituency Councils, and had instituted just before his death the biggest Cabinet in the history of government ever in Barbados. Thompson also ensured that the largest EVIL WICKED TAXATION THEFTS that have so far been carried out in this country were inanely carried out in 2008, so much so that even simple bicycle owners were hunted down by the former DLP leader for more taxes. Since taking over from Thompson, Chris Sinckler would have done nothing to stop the Standard and Poor’s downgrade, furthermore he made sure that he was the Finance Minister under whose watch this was going to happen by increasing EVIL WICKED TAXATION THEFTS further in his 2010 Budget, and by increasing government borrowings.
As for the present Governor of the Central Bank of Barbados, Dr. Delisle Worrell, his role in this massive decline in the political economic state of affairs of Barbados, has been to casually attempt – however unsuccessfully – to explain away this gigantic prolonged political economic financial depression Barbados is in, rather than to find strategic solutions out of it. Also he has been less than credible in his utterances on many issues pertaining to the amount of growth of nominal incomes, payments and transfers that have been generated in the political economy and services industry sectors in Barbados, pertaining to whether or not these same sectors can be deemed as stable in their overall performances at this stage; pertaining to whether or not the rate of unemployment that exists in Barbados today is more than what the Central Bank officially says it is, etc; such and more, ever since the Central Bank of Barbados would have perfunctorily recalibrated the so-called economy in 2010 to make the fictional size of the so-called economy seem bigger than what it really is, and to mainly mask the deep-rooted material and financial problems that the government is in and the country is in.
We again call for the public to make sure that there is a Commission of Inquiry into the administrative research functioning of the Central Bank of Barbados.
Well, since money cannot make money, and money cannot cost money, other than it is foreign exchange, and since nominal incomes, payments and transfers cannot be produced without money, the position that the Barbados government finds itself in having its credit rating for foreign currency bonds downgraded to junk bond status by Standard and Poor’s; in having therefore to face the grim prospects of paying higher costs to use the US dollar here in Barbados; and in having to face the spectre of outright refusal by some persons overseas to invest in government bonds on the international capital markets, etc. is extremely scandalous and ignominious.
As that, contrary to what Standard and Poor’s has said about the reasons why the Barbados government has had its debt profile downgraded…as stated by them ….“owing to the weakening of the economic fundamentals…and that such is a function of a still very weak external environment and its impact on Barbados, and the big competitive challenges and structural shortcomings that Barbados faces, inter alia”, the real and fundamental causes of this down grade are not even being dealt with by them. This is something that Standard and Poor’s must be told in no uncertain terms. Standard and Poor’s, in its reported explanations for downgrading the debt profile of the government of Barbados, is dealing with the symptoms or the effects of the causes of the fundamental political material financial problems that Barbados faces at this stage. So, in its down grading of the government of Barbados credit rating, it is not dealing with the underlying causes of these problems either, neither is the jack-o-lantern DLP/the BLP dealing with real underlying substantial causes of those problems.
For some of the real and fundamental causes of the conditions and decisions that have led to this junk bond status are:
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DLP/BLP Barbados governments having over the years been purporting to make so many people believe that it has the ABILITY TO REPAY LOCAL AND FOREIGN DEBTS, WHEN IT CLEARLY DOES NOT. It mainly conducts that kind of atrocious deleterious debt generating business via its fiat. It is a fraudulent thieving series of subterfuges that these governments have been engaging in. No financial institutions in Barbados would lend millions to any private person or any private entity that does not have the ability to repay period.
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Notwithstanding their having so many marketable and saleable assets and services at its disposal, and their having so many government people with so many marketable skills and services at its disposal, DLP/BLP governments have been blatantly openly wicked and gross carrying on with TAXATION and excessive interest rate driven public sector borrowings, etc. rather than they making sure that TAXATION, Interest Rates are abolished, etc. and rather than they making sure that these things and people are put to maximum use in the process of the government earning more of its income on a sustained basis in this country. What backward wicked governments!
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The improper use of money and improper allocation of money by Government.
So there we go.
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