Imagine! The house engulfed in flames, but the DLP assures: “don’t worry, we have the key to the front door!” The Government is now making the wild allegation that its ability to access a US$225M bridging loan in these tough economic times, is an indication that Barbados can still borrow on the International markets at reasonable rates.’. How can a “rolling-basis-interest-rate,” ‘EVER’ be a good thing?
Owen Arthur would describe this as: ‘a man jumping off the 80th floor of a building, without a parachute and when passing the 50th floor, is heard to say: “so far so good.” Let’s put this discussion in context. You will recall that the DLP was forced to withdraw its $500 million bond offer on the International Capital Market because (given the “JUNK BOND” status the DLP has earned for Barbados) respected and credible International Investors now find Jamaica’s debt more attractive than Barbados.’
Remember also, that the Central Bank of Barbados took-up US$375 million and essentially bought “JUNK:” with it, that is to say – “DLP-JUNK-Bonds.” Then consider that since June, the DLP caused this country to lose over $400m in foreign reserves. With the foreign exchange cover causing panic, the DLP is “desperate” but it finds itself in a position of absolute weakness – having had four downgrade, including one to “JUNK,” as well as a negative credit rating. Investors like Barbados but they have simply lost confidence in the DLP and with this much uncertainty (where all indicators are showing that things are deteriorating “fast”) a capital flight is inevitable!
Nobody is taking delight at the DLP’s misfortune! Because every time the DLP gets it wrong, (which is often and on everything) Barbadians pay with increased taxes and more pain.
What are the facts, as regards this US$225m bridging loan? The DLP is incurring more debt, this time on the foreign exchange side but in circumstance were the economy continues to shrink and where the foreign exchange earning sectors are not producing. This is a short-term loan, with a high interest rate and with strict conditions attached. It would seem that as a condition of this loan, the Government must provide the bank, Credit Suisse AG, with a full Copy of the IMF staff’s report of its article 4 consultation with the IMF, scheduled for next week, and a schedule of the Government’s plan for implementation of any IMF recommendations.
It is not “you” – the people of Barbados, who the DLP feels it has to account to, even after promising (as part of its good governance charter) to let Barbadians know what it is doing on their behalf. It is prepared to be accountable to foreign interests (Credit Suisse AG, and the IMF) not you who voted for it in February! I asked recently if you can trust the DLP, can you?
Do you realise that an old lady selling fish in the Oistins Fish Market – can go into any Commercial Bank and get a loan on more favourable terms (perhaps with 10 to 15 years repayment period) than a DLP Government – once her business plan is in good order?
What are the terms? It would seem that $20 million has to be set aside in a separate account not accessible by the dems. That may not be a bad thing! Nevertheless, this is short-term money and at a very high rate of interest. Seems like the rate can be fixed but that would attract a fee, which the Government can hardly afford. The only certainly here is that as long as the DLP is the Government – things will get much worse! It is why in order to get that (take-it-or-leave-it) short-term loan for US$225m – even though at a high interest rate – Barbados has to report to ‘a Commercial Bank,’ what is contained in an Article 4 Consultation with the IMF and on top of that – how it plans to implement any IMF recommendations. Talk about surrendering Barbados’ sovereignty! But what would you expect from a Government that may be seriously considering selling Barbadian passports and citizenship, perhaps to get foreign exchange? The shocker is that the US$225m bridging loan – comes with a rolling-basis-interest-rate.
Christmas is coming but so too is the IMF and it may be quite some time before a number of Barbadians can afford to eat a little ham, jug jug or turkey again. And come January 2014, the DLP may have US225 million reasons why it will send home the same 10,000 Public Servants, it mentioned in those paid general election ads. If so, Christmas will be no more merry than the New Year likely to be happy for over 10,000 Barbadians and their families.
Nobody believes that the DLP has what is necessary to improve the economy and see it through to brighter days. That’s why the Bank seems to have opted to make provisions for further decline. They know – like you do (even if not willing to admit it) that the DLP’s inability, compounded by its propensity to conceive flawed policies; exercise poor judgment and make bad decisions – is the reason things will get worst.
Even the “Market Vendor” can get a loan at fixed interest rates but not the DLP. Their’s is a rolling-basis interest rate, take-it-or-leave-it! And yet, the DLP can somehow feel good and boast that Government’s ability to access a US$225M bridging loan in these tough economic times, is an indication that Barbados can still borrow on the International markets at reasonable rates.’
Barbados is a good country but it has a very weak Government, which nobody has confidence in but one which feels that it should be congratulated for earning a “JUNK BOND STATUS” downgrade for Barbados – an achievement that not even Erskine Sandiford (when at his lowest) was capable of!