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Unmanageable Sovereign Debt

It seems obvious to BU that successive governments have allowed debt levels to rise to unsustainable levels. The key indicators used by the analysts all show that Barbados leads Caribbean and Central American countries as it relates to servicing debt. The IADB report highlighted also shows that rising debt is a problem for almost all Caribbean and Central American countries. We are facing a systemic problem of enormous proportion.

With increasing levels of debt and, in most cases, low growth or weak macroeconomic fundamentals and declining fiscal surpluses, the developing economies of Central America and the Caribbean are becoming more concerned about their ability to adequately service sovereign debt from lower fiscal surpluses with the increasing possibility of sovereign default risk (See Table 2.2, showing average fiscal surplus or deficit over the period studied).

See IADB Report – What are the Fiscal Limits for the Developing Economies of Central America and the Caribbean?

94 responses to “Unmanageable Sovereign Debt”

  1. Dentistry Whisperer (M. Pharm. D) LinkedIN Avatar
    Dentistry Whisperer (M. Pharm. D) LinkedIN

    How soon we forget. UPP – Go girl go!

  2. Bajan Free Party/CUP Violet Beckles Plantation Deeds from 1926-2017 land tax bills and no Deeds,BLPand DLP Massive land Fruad and PONZ Avatar
    Bajan Free Party/CUP Violet Beckles Plantation Deeds from 1926-2017 land tax bills and no Deeds,BLPand DLP Massive land Fruad and PONZ

    Old numbers, what is it today in 2017? How much morePain do we need before removing the DBLP Slavery queens?
    5 more years of the D or B will be pure Hell, Tax VAT and Kill Parties of Crime and Corruption, Audits well needed to find out where all the money went to,
    20 years of VAT unaccounted for, NHC/UDC Fraud, Massive Land Fraud, Banking Fraud, Laundering on all levels, Buyouts Payout, No Gains ever in Selling government own Businesses banks nor other business,
    DBLP do not understand or have an understanding of how things work, Massive Fraud by lawyer agreements payouts,Fraud is the Order of the Day, time for both to go to?

  3. Pachamama Avatar
    Pachamama

    David
    Maybe all governments have seen the obvious end to the fiat system

    Thusly, it may not be unwise to not stop borrowing

  4. David Avatar
    David

    @Pacha

    What has clearly been exposed by this report and others is that current econometric and other modelshave used to inform decdecision-making have become outmoded.

    Where do we go from here given our apparent helplessness as developing SIDs?

  5. Bush Tea Avatar
    Bush Tea

    @ Pacha
    We both know that such strategic thinking as you propose is beyond the capability of these leaders. It is much more conceivable that, driven by greed, laziness and the albino-centric drive that pervades all societies, they just grabbed whatever they could in their mindless materialistic orgy of greed.

    In any case, Bushie disputes your contention that such a strategy (of maximising debt in the face of system collapse) is a sensible approach for a country. Any such collapse will be chaotic and painful – and the very first victims will those most indebted and exposed by liabilities.

    Living beyond one’s means…is just simply a one-way, dead-end street.

  6. Bush Tea Avatar
    Bush Tea

    @ David
    Where do we go from here given our apparent helplessness as developing SIDs?
    +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
    It is a dead-end, one-way street to chaos and death….. It ALWAYS was.
    …..but brass bowls are easily distracted by the short term pleasures of spending what they did not earn…. like driving around for a couple months in a $3/4M Benz, when you have not produced a single productive shiite in nine years.

  7. Pachamama Avatar
    Pachamama

    Bushie
    Implicit to your reasoning is a semblance of orderly collapse.

    We see it coming from the centre’s of global economic and political power.

    This will not be the first time. Remember tulipmania.

  8. David Avatar
    David

    @Bush Tea

    We are battling the will to change fashioned by years of feeding a consumption model. We blame politicians but ordinary citizens are vested if we accept that we are to hold governments accountable. Yes this is the idealistic position we hasten to admit.

    Unfortunately we have a bigger problem and that is how to lighten the debt load in the near term. In other words -we have to extricate ourselves from the debt trap as a GROUP, as single entities we cannot exist in a contaminated space.

  9. David Avatar
    David

    What is scary is to observe the Barbados and Caribbean space devoid of the tenor of conversation we are currently engaged among our leaders.

  10. angela Skeete Avatar
    angela Skeete

    Pray tell which financial institution would lend these indebted country money and if there are any the interest rate would be high and further expand the debt. The long and short fiscal measures should have been applied years ago to pay the debt instead of make belief policies built on refinancing debt to pay debt for over extended periods
    The chickens have finally come home to roost

  11. Bush Tea Avatar
    Bush Tea

    @ David & Pacha
    The main reason for our demise is that idiots like the one posting @ 8:04AM above are even allowed to discuss matters such as these – far less to influence national policy.
    It is like putting the intellectually challenged children in charge of the family fortune – and expecting anything but chaos and poverty.

    ….or like putting Peter Polester to be a national spokesman on VOB when he is clearly a flawed specimen. Nothing wrong with being dyslexic…., but it is clear that he is contaminated with much worse ‘flaws’…. such as his unmannerly and uncouth attitude during last Sunday’s brass tacks – and even he admits it was not the first time – recalling his embarrassment with Lucile Baird some time ago….

    Despite this idiot’s clear incompetence and ongoing embarrassments, David Ellis persists with imposing him, and his warped ideas, on Barbados ….. and gets PROMOTED in the process.

    Do you see now why the local press are unable to hold any fire to politician’s feet – or indeed to the society’s feet?

    Idiots are in charge….Wisdom is silenced.
    How then can we “extricate ourselves from the debt trap as a GROUP”….?
    Our ass is grass boss….

  12. William Skinner Avatar
    William Skinner

    Everything mentioned here was known fifty years ago. The garbage that is coming out is exactly what was put in: pseudo intellectuals, party hacks, academic snobbery, classism, racism and an insatiable appetite for sophistry. Copying decadent economic models that could have been only successful in slavery. Yet in 2017 after all the eloquent commentary we still see the IMF as our only hope. We cuss the political class but our thinking is not that distant form theirs.

  13. Bernard Codrington. Avatar
    Bernard Codrington.

    @ Pacha at 7:58 AM

    “This will not be the first time. Remember tulip mania”.
    How true. The international capitalist economic system survived that as well.

    @ Bushie

    Do not blame the political class. It is the technocrats who failed to do the maths and advise them appropriately. Or if they did , they have lost the art of managing the political class.

    @ David

    A very interesting academic paper. But you should check with our resident economic and financial expert. Is not the Laffer curve one of those arcane economic ideas that was punished with laughter {pun intended} ? There was only one single episode of it having worked in economic history. It has no credibility in the advanced economy. I was surprised to see it being applied in small open economies with the extreme built in volatility that is part of their nature
    Thanks again Pacha for pointing out the folly of our thinking.

    The attached article is worth reading. It should keep Alzheimer away.

  14. Frustrated Businessman: enact Facilitation Martial Law! Avatar
    Frustrated Businessman: enact Facilitation Martial Law!

    We have bankrupted ourselves to support an unproductive population led by unproductive and un-facilitating civil servants and employees of statutory corporations that were created to lose money.

    Fewer and fewer of us are supporting more and more.

    Where is the mystery?

    Recovery of this economy must start with:

    Leasing of all the statutory corporations to the employees for $1 per year and commencement of a 5-year program to ween them totally off of subventions.
    Establishment of civil service oversight through a depoliticised senate that can hear complaints from tax-payers promptly and sanction departments and individuals.
    AG’s office billing gov’t departments for legal services spent defending their stupidity and incompetence, payment thereof to come out of ministry’s annual budget.
    Leasing gov’t agricultural land to small farmers at the current BADMC rate ($200 per acre per year).
    Gov’t to get out of any business where it competes with tax-payers.

    If private-sector confidence is not restored in gov’t by the next cabinet, there will be no change in outcome; it is 7 years to late for the current crop of idiots.

    If the private sector is re-energised, recovery of our little economy would be swift.

    There will be no economic recovery under Fumble’s Fools.

  15. David Avatar
    David

    @Bernard

    Is this another event we have to wait until it evolves?

    Based on the graphs-not Laffer- almost all the Caribbean and Central American countries are in the soup. The issue is now bigger than what is happening in the Barbados space?

  16. Pachamama Avatar
    Pachamama

    Bushie
    When we see obvious dysfunction at the centre of this American system and there are no responses away from the centre, like in the Caribbean for example, one must conclude talk about debt burden is useless talk.

    Those who increasingly conflate today,s problems with those our best scholars adumbrated underestimate the what,s happening currently

  17. Frustrated Businessman: enact Facilitation Martial Law! Avatar
    Frustrated Businessman: enact Facilitation Martial Law!

    The entire idea that gov’t has to PROVIDE social services rather than PAY FOR social services is where our slippery slope started.

    We have a functioning Fair Trading Commission that could be justifying the cost of low-income housing rental, medical services, education and everything else that makes up our social net.

    When gov’t PAYS the private sector for services, competition makes it affordable. When gov’t PROVIDES social services, costs and teefin’ go up and quality declines.

    Communism is dead. Socialism has a price and we are paying too much for what we get.

  18. Artax Avatar
    Artax

    “The long and short fiscal measures should have been applied years ago to pay the debt instead of make belief policies built on refinancing debt to pay debt for over extended periods.”

    @ Angela Cox-Skeete

    “Your NEED to PONTIFICATE on ANY and EVERY GIVEN MATTER is ASTOUNDING. [angela Skeete April 12, 2017 at 8:42 AM #]”

  19. Bernard Codrington. Avatar
    Bernard Codrington.

    @ David at 9 :32 AM

    The world evolves. You may not realize it but you and BU are assisting the evolutionary process. I have not worked this hard intellectually except for the structural adjustment period in the early 1990s.
    Pacha clued you in by using the term Fiat system. Some body said let there be and there is /was. If the innocent lad says the emperor has no clothes on, the whole world will see his nakedness.. So relax.

    The USA , the UK, Germany have run much larger twin deficits of Trade and Budget for decades. They are still around. I assure you the Caribbean will survive this crisis as well.

    Again I would like to emphasize that
    (1) the bulk of the National Debt of Barbados is owed to its component parts.
    (2)The terms of trade are negotiable.
    (3)What we chose to produce and trade is a Barbados decision.
    (4) We need to grow the economy.
    (5) Since Mr Arthur demitted office the Barbadian Economy has not been effectively managed.

  20. Hal Austin Avatar
    Hal Austin

    Apologies, but which of his 14 years as prime minister and minister of finance did Owen Arthur managed the economy competently? Did I miss a trick?

  21. David Avatar
    David

    @Bernard

    Thank you for your detailed response. If you can clarify a couple points.

    Can you expand on the downside to renegotiating the terms of trade as you describe it?

    Does it matter that the debt servicing for foreign is comparatively much less than local? What matters is our capacity to generate foreign revenue to pay the bills.

    Also increase in the local money base will not help with improving the situation.

  22. Vincent Haynes Avatar
    Vincent Haynes

    Frustrated Businessman: enact Facilitation Martial Law! June 14, 2017 at 9:29 AM

    Excellent points to which I will add

    A Director-General for all projects undertaken by the govt…..with a board of directors of no overt political bias.

    Agriculture must fall under a board comprised of farmers who will regulate what will be produced and impose a quota system for farmers thereby eliminating the possibility of experimenting with production or developing a glut.

    Community tourism be officially acknowledged and broad guidelines laid down to include everyone who so wishes..

    Taxes to be reviewed to eliminate the small man from paying any as he will be caught in the VAT net and allow an equitable rate for the high end earners.

    Land reserve and use regulations to be laid down.

    Education to revamped.

    Note we have always paid for social services as well as everything else in this country by virtue of our taxes for the last 50 years.

  23. angela Skeete Avatar
    angela Skeete

    The Barbados economy was never efficiently managed borrowing money to pay off existing debt was how barbados economy was managed compounded by a tax rate that was not sufficient enough for govt to pay foreign loans and managed the country internal debt
    The bottom line now shows that Barbadians were hoodwinked into a false sense of security and all the failures have risen to the top
    The govt of the day did not have the foresight or vision to realise that leaner times would come and take precautionary measures to ensure that barbados would not be caught like deer staring in the head lights
    Presently barbados is caught in a debt trap with little ir no wiggle room except to feel the pain and anguish which comes with paying outstanding debt

  24. angela Skeete Avatar
    angela Skeete

    Osa was the biggest bull sh.itter. just cannot understand how barbadians put this man on a pedestal of grand expectations
    Here these people are sucking salt having to pay back some if the debt OSA incurred with his insatiable appetite for borrowing and still ready to drink more of the witches brew he served under his watch

  25. Vincent Haynes Avatar
    Vincent Haynes

    We really are a mendicant society in the Caribbean, putting all of our eggs in the tourism basket.

    https://www.facebook.com/abstvradio/videos/1421060531326500/

  26. Artax Avatar
    Artax

    angela Skeete June 14, 2017 at 12:51 PM #

    “The Barbados economy was never efficiently managed borrowing money to pay off existing debt was how barbados economy was managed compounded by a tax rate that was not sufficient enough for govt to pay foreign loans and managed the country internal debt…..”

    @ Angela Skeete

    “Your NEED to PONTIFICATE on ANY and EVERY GIVEN MATTER is ASTOUNDING. [angela Skeete April 12, 2017 at 8:42 AM #]”

    Your above response is utter nonsense and clearly indicates that issues of the economy are BEYOND your INTELLECTUAL CAPACITY and pay grade as the DLP’s resident yard-fowl troll, paid to represent them in this forum. In other words you are an “economics dunce.”

    How can any country in the world manage an economy by borrowing to repay existing debt, without consolidating that debt?

    Sinckler is on record as having said Barbados has never defaulted on its debt obligations.

  27. Artax Avatar
    Artax

    Hal Austin June 14, 2017 at 12:13 PM #

    “Apologies, but which of his 14 years as prime minister and minister of finance did Owen Arthur managed the economy competently? Did I miss a trick?”

    As usual Hal Austin comes to BU with his “holier than thou attitude” trying to convince us he knows more about the Barbadian economy than any other person in the entire world.

    And his suggestion? Barbados should invest in securities.

  28. Hal Austin Avatar
    Hal Austin

    My suggestion? Whose securities? Fabricating nonsense has now become a feature of many of the regulars in BU. It seems they have nothing else to say. Where is the evidence? Is he talking about derivatives, which I have suggested as a replacement for stockpiling foreign reserves?

  29. Artax Avatar
    Artax

    Frustrated Businessman: enact Facilitation Martial Law! June 14, 2017 at 9:57 AM#

    “The entire idea that gov’t has to PROVIDE social services rather than PAY FOR social services is where our slippery slope started.”

    @ Frustrated Businessman

    Yes, and such policies, which are mainly funded to solicit votes, creates a mendicant society where citizens expect government to provide all social services without making the necessary contributions through taxation or paying a service fee.

    The reality of the situation is vendors, artisans, other entrepreneurs and some providers of professional services do not want to pay taxes but expect their children to attend government owned nursery, primary and secondary schools, benefit from health care, subsidized bus fare and other social services offered by government, at the expense of the working middle class, who bears the brunt of taxation.

    Barbados does not have the resources to adequately finance providing these social services without borrowing to do so.

    How long will successive administrations, for example, continue to subsidize bus fare at $2 for a poorly managed Transport Board, when bus fares should be determined by the market?

  30. Vincent Haynes Avatar
    Vincent Haynes

    Artax

    What am I missing….

    I thought the object of VAT was to ensure everyone paid into the tax coffers as it was too burdensome and costly to run behind the small man and collect pittances.

    The first year VAT returns more than justified that thinking……and a number of individual tax takes were discontinued.

    Social services should be covered from that pool.

    A tax net should be devised for high end earners……a home grown solution might not be a good idea based on our past performances but myriad solutions exist around the world …pick one or a hybrid that can work for us.

    The small man….minority…..poor man all are low hanging fruit and we too love to pick them.

  31. Artax Avatar
    Artax

    “Fabricating nonsense,” shiite!!!

    Okay, Hal Austin, I was incorrect to state securities when I meant derivatives……….. So what???

    “Securities or derivatives,” my point still remains that you present yourself in this forum as a “know it all braggart” who uses pejorative and condescending statements to insult other contributors when they challenge you. A clear indication of narcissism.

    What you should do is, rather than promote yourself as the “intellectual supremo” of BU, tell us which country’s economy you successfully managed or any ideas/suggestions you offered that were successful in achieving the desired objectives.

    And I must remind you, how can I produce “evidence” when, according to you, it has not been tested in court under cross examination than it is hear say?

  32. Hal Austin Avatar
    Hal Austin

    Artax,
    I got you. Evidence in this case is the year/s when in your view Mr Arthur competently managed the economy, and why.
    By the way, I like a challenge. I see it as a learning experience. And no, I am not an intellectual. I barely went to school.

  33. Vincent Haynes Avatar
    Vincent Haynes

    Artax

    Chuckle…..You have been elevated as Hal loves your challenge but runs from others….hahaha

  34. Pachamama Avatar
    Pachamama

    Anybody suggesting derivatives as an alternative has introduced a level of financial ignorance hithertofore unknown

  35. millertheanunnaki Avatar
    millertheanunnaki

    @ ArtaxJune 14, 2017 at 1:32 PM
    “The reality of the situation is vendors, artisans, other entrepreneurs and some providers of professional services do not want to pay taxes but expect their children to attend government owned nursery, primary and secondary schools, benefit from health care, subsidized bus fare and other social services offered by government, at the expense of the working middle class, who bears the brunt of taxation.”

    You have not mentioned that many of these ‘evaders’ of income tax do so blatantly with the connivance of the same tax authorities mostly acting under direct instructions of their politically-elected masters who are connected personally to the tax cheats or are in receipt of funds from the same tax evaders to support their political operations.

    Just look at how Leroy Greenverbs has been able to ‘avoid’ paying taxes on his gratuity by passing it through a laundry machine once operated by the highest political operative in the land.

    How did that money find its way into the vault of the CBB for safe keeping if not with the connivance of the politically well-heeled big shots?

    What about the VAT charged on that invoice to the BWA? Why was it charged on a poorly-designed invoice giving no indication the supplier of the services is legally registered to charge and collect VAT on behalf of the then C&E Department?

    Wouldn’t that money come in handy to help pay the wages of some public sector workers for another few weeks or go towards reducing the fiscal deficit? Remember every little helps to go a long way!

    Barbados is a small 2×3 place whose tax base or roll could be easily managed by way of a simple ICT platform.

    Every user of government services who are not paying the full user fees for such services ought to show evidence they are registered with the BRA. Those services should include direct access to education and health which are currently “free” and the point of delivery whether to the adults or to their dependants.

    Isn’t that what the BRA was set up for along with the issuing of a Barbados ID?

    The same way the current administration wanted to ‘fingerprint’ every Bajan (except those with privileges) leaving and returning to the little island why not make sure every adult Bajan is registered with the BRA and the NIS?

  36. Bernard Codrington. Avatar
    Bernard Codrington.

    I was hoping that Hal, when he joined the discussion, would have expounded on the Laffer curve. How disappointing that he challenged my opinion of Mr. Arthur’s management of the Barbados economy.

    @ Vincent Haynes 1: 43 PM

    You are quite right. One of the objectives of VAT was to make sure that everyone ,including the unemployed , contributed to the cost of running this country. It also captured many of those operating in the underground economy.

    @ Artax

    You are quite right about the risks of allowing citizens of Barbados, a middle income country ,to behave like mendicants. There are no free lunches in life. I am old enough
    to recall when hawkers had to pay for a license to sell accees and bananas. Owners of donkey carts and bicycles had to pay a days and sometimes a week’s earnings to operate them. So rich and poor always contributed to the treasury.

  37. Hal Austin Avatar
    Hal Austin

    Bernard,
    As you well know, Laffer believed basically that the higher the tax rate, the lower the tax revenue ie the wider the tax gap. That remains controversial. Like most things, it contains a half-truth. It depends on how the higher tax rate is imposed.
    The Laffer prohibitive range can be compromised by demanding social circumstances. Remember Japanese donating all their jewellery to get the state out of a compromising position after the 1998 crisis? In such circumstances those people would have been proud to pay all their wages as taxes.
    But long before 1974, when Laffer was reputed to have drawn his curve, it was a fairly common view in macroeconomics that the inverse relationship between tax rate and revenue. In fact, Adam Smith referred to it.
    @Bernard in the final analysis, once people think their standard of living is improving they will not have any problem with paying higher taxes.
    In Barbados the problem is the tax gap, as the Auditor-General shows us every year. Our administrative class is incompetent.
    People also object to higher taxation to pay civil servants salaries and politicians’ wages and pensions.
    I will end on this simple example: VAT is a tax which costs the government virtually nothing to collect: it is paid by consumers, collected by the private sector and, in theory, paid to the government.
    The problem in Barbados is that our civil servants cannot even collect money that the private sector already has collected, allowing them to use it as cash flow.
    It is shifting wealth from the poor to the well off. A scandal.

  38. Hants Avatar
    Hants

    The best way to collect tax from a fisherman is through the VAT he pays when he spends earned income.

    Same for self employed carpenters masons labourers etc.

  39. Artax Avatar
    Artax

    Hal Austin June 14, 2017 at 1:59 PM #

    “Artax, I got you. Evidence in this case is the year/s when in your view Mr Arthur competently managed the economy, and why.”

    @ Hal Austin

    “You got me?” Far from it, my friend!

    Recall you wrote: “Hal Austin June 14, 2017 at 1:23 PM #: Where is the EVIDENCE? Is he talking about derivatives, which I have suggested as a replacement for stockpiling foreign reserves?”

    Hal, yuh know you should have contemplated your comment re: “Hal Austin June 14, 2017 at 1:23 PM #: Fabricating nonsense has now become a feature of many of the regulars in BU. It seems they have nothing else to say,” BEFORE trying to “DECEITFULLY and CONVENIENTLY CORRELATE” the “evidence” you referred to in your 1:23pm comment with: “EVIDENCE in this case is the year/s when in your view Mr Arthur competently managed the economy, and why” in your 1:59pm comment.

    Additionally, I NEVER gave the VIEW that “Arthur competently managed the economy” for any given period of time.

    I recall responding to Grenville Phillips II, who used an IMF report to justify his opinion that debt for any country should not exceed 40% of GDP.

    I REFERRED to an EXCERPT taken from page 5 of the 2004 IMF Article IV Consultation Report re:

    “Barbados’ economy did well in the 1990s, supported by prudent policies and a favorable external environment. During 1993–2000, per capita real GDP growth averaged 2.5% per year, annual inflation was 2 percent or less, unemployment declined sharply, and key social indicators improved further. The structure of the economy shifted from agriculture to tourism and financial services. This performance was achieved in the context of small fiscal deficits (less than 2% of GDP), a conservative monetary policy (which resulted in a substantial accumulation of external reserves), and a range of market-oriented reforms.”

    Hal, the above are not MY opinions, but the OPINIONS of the International Monetary Fund’s (IMF) ECONOMIC TEAM that visited Barbados to give an assessment of the economy at that time.

    It is erroneous for you to attribute those comments to me.

    Hal, as a “journalist,” your reading and comprehension skills are noticeably lacking.

  40. millertheanunnaki Avatar
    millertheanunnaki

    @ Codrington.June 14, 2017 at 10:08 AM

    “(4) We need to grow the economy.”

    I would do what the apologists on this blog for the current intellectually-defective DLP administration ask the BLP supporters:

    What are your proposals/solutions to ensure that the economy grows the way it is “needed” to survive the crisis?

    Proffer at least one way or direction for Barbados to follow to get on that much needed path of economic growth.

  41. Frustrated Businessman: enact Facilitation Martial Law! Avatar
    Frustrated Businessman: enact Facilitation Martial Law!

    Artax, further to your excellent points, VAT is the only fair tax. It should have replaced all others years ago and the entire complicated tax-collection system dismantled.

    With VAT, If you consume, you pay. If you do not consume, your money sits on bank accounts or in investment funds to be used by others and they pay.

    Our VAT should be 25%, VAT-registration only for $1M or more in trade, and all foreign exchange purchases from local businesses VAT free.

    Our problems are simple, we just have no willingness to solve them.

  42. angela Skeete Avatar
    angela Skeete

    OSA in his own words suggested that barbados consolidate some of its debt by way of IMF loans
    To ” consolidate” is another glorified way of saying “borrow”

  43. Bernard Codrington. Avatar
    Bernard Codrington.

    @ David

    Re Separating the Sovereign Debt into Foreign and Domestic Components

    Foreign loans must be repaid in foreign currencies and should only be taken if the projects for which they were borrowed generate foreign exchange, contributes to the savings of foreign exchange,or prevent the loss of foreign exchange generating activities.
    The sources for repayment is a trade surplus (exports exceed imports) or further borrowing( refinancing of debt). If these do not happen there may be a crisis. It is therefore important to assess the required payments in respect to the foreign exchange earning capacity of Barbados. My personal opinion is that it is manageable.

    Sovereign debt owed to local households, corporations and pension schemes are debts owed to ourselves. They are a result of a political decision not to tax, or a political decision to distribute the cost of public goods and services between present and future generations. This is equitable. They also generate incomes to the owners of these debts. And they put no stress on the foreign reserves or the foreign exchange rate.

    Borrowing from the Social Insurance scheme and other segregated funds should be capped at an agreed level ,consistent with an agreed risk profile. They should not be regarded as part of the official foreign reserves nor part of the GOB Consolidated Fund

    It is important to ask:”High debt in relation to what?” And more importantly” Is it sustainable?”

  44. Bernard Codrington. Avatar
    Bernard Codrington.

    @ Hal Austin @ 2: 57 PM

    Thank you very much. You did not disappoint. Very often it pays to wear blinkers and develop tunnel vision so that you may not be distracted from your objectives and discuss trivia.

  45. Vincent Haynes Avatar
    Vincent Haynes

    Hants June 14, 2017 at 2:57 PM #

    Well stated…..quite simple…..one cuts to the chase.

  46. Frustrated Businessman: enact Facilitation Martial Law! Avatar
    Frustrated Businessman: enact Facilitation Martial Law!

    Bernard Codrington. June 14, 2017 at 3:50 PM #
    @ David

    Sovereign debt owed to local households, corporations and pension schemes are debts owed to ourselves. They also generate incomes to the owners of these debts. And they put no stress on the foreign reserves or the foreign exchange rate.

    Wrong.

    All cash in circulation in Bim creates a demand for goods which are mostly paid for in ForEx. We do not make anything other than pork and chicken, even their feed components as well as yams and sweet potatoes are now imported.

    This is why removal of circulating cash by gov’t in the form of further taxation, investment notes and non-payment for local goods and services in an effort to save ForEx will cause economic recession in the coming months and not realise the tax income goals touted as the economy shrinks and economic activity is curtailed.

    We cannot tax ourselves into prosperity. Prosperity is only achieved when many people are involved in much economic activity and everyone takes their cut. No cash, no economic activity, no cut; economic disaster.

    There will be no economic recovery under Fumble’s Fools.

  47. William Skinner Avatar
    William Skinner

    Only complete jokers would believe that there is no root cause to our problems. We are still trying to extend the life of the plantation economy and it would not work. The major problems which confront the region are a rapidly deteriorating environment and a serious escalation in crime. It is much easier to fix the economies by a blend of technological innovation, a radical reform of the education system and setting and maintaining incremental goals. We have the human resources to make the adjustments but we are constantly refusing to bite the bullet.
    For example: Why pretend that the self employed should not pay taxes but the state must have an obligation to feed , house and clothe them in their old age ? Why pretend that we can have free university education forever on some silly false premise that only a university degree guarantees upward socio-economic mobility ? Why are we afraid to realise that technology not only replaces but creates jobs ?
    Am I to believe that if the society produces 1000 mechanics a year it would be worst off than if it produces 300 history , sociology and law graduates from UWI?
    Am I to believe that we cannot reduce our import food bill by 25% over the next decade that will result in saving millions in FX thereby reducing the fiscal deficit and improving our reserves? Am I to believe that a ban on cars with engines above 1500 cc for private use would cause widespread famine?
    Are we going to forever be dependent on the IMF and other agencies to keep us economically alive but on a respirator?

  48. Vincent Haynes Avatar
    Vincent Haynes

    William Skinner June 14, 2017 at 4:15 PM #

    Why pretend that the self employed should not pay taxes but the state must have an obligation to feed , house and clothe them in their old age ?
    …………………………………………………………………………………………

    VAT is a tax and was intended to ensure everyone subscribed to the state……so presently everyone contributes….no one in Bim is a tax defaulter.

    The aspiration of any modern and caring society should be exactly the above…….ensuring all are cared for from the cradle to the grave……something progressive western societies copied from certain ancient African kingdoms.

    Why the continuous need to pick at the small man……what is there in our psyche that we must always take the lazy way out and kill low hanging fruit……what have they done you……all of us came from those fruit.

  49. Artax Avatar
    Artax

    “angela Skeete June 14, 2017 at 3:41 PM #: OSA in his own words suggested that barbados consolidate some of its debt by way of IMF loans. To “consolidate” is another glorified way of saying “borrow”….”

    George Street definitely does not proof read the comments of their paid trolls. If they did, they would not have allowed that yard-fowl to embarrass the DLP by posting such nonsense to BU.

    The word “consolidate” may be defined as process of “combining (a number of things) into a single more effective or coherent whole.”

    Hence, debt consolidation allows a country to combine/merge its multiple outstanding debts into one debt obligation.

    The country may seek financing to pay off this single debt obligation, facilitated through a loan where the payments of principal and interest are significantly lower. The decrease in interest rates help debt stabilization through reducing debt servicing costs and cushioning the contractionary impact of consolidation.

    We could explore the suggestion of debt consolidation if we take, for example, certain variables into consideration, such as the unsustainable fiscal deficit and future increases in public expenditure as it relates Barbados’ ageing population.

  50. David Avatar
    David

    We should try to keep the conversation above the usual political rhetoric and here is why. Barbados AND most Central America and Caribbean countries all find ourselves batting the same mounting sovereign debt problem. A few here debating the issue probably have not even read the damn report. Herein is where our problems start. We are a financially illiterate people who are guided by political biases.

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