Bajans MUST Demand Final Word on IMF Deal

Submitted by Tee White

The decision of the new BLP government to seek the support of the International Monetary Fund (IMF) for the implementation of its comprehensive economic reform programme has provoked reactions from all sides.

Those who support the decision have argued that the country had no alternative, given its poor credit rating and high level of indebtedness. Prime Minister Mia Mottley put this at over 170% of GDP and stated that, measured against GDP, Barbados is the third most indebted country in the world, placing it after only Japan and Greece. The supporters of the move further argue that with an effective negotiating team and negotiating strategy, there is no reason why Barbados might not benefit from engaging with the IMF. Finally, they argue that the IMF of today is no longer the big bad wolf of previous years.

Those, who oppose the decision, point to the country’s previous engagement with the IMF, in the early 1990s, when job losses and cuts in public sector wages led to protests and the downfall of the Sandiford DLP government. They also point to the experience of Jamaica which has been entangled with the IMF for the last 40 years and is still considered to be in need of IMF support.

The key aspect of the current situation, as it is presented to the people of Barbados, is the government’s fiscal deficit. While the government collects BD$2.7 billion in taxes, it spends BD$4.4 billion, of which some BD$1.5 billion is used to service the existing debt of BD$15 billion. In order to cope with this situation, the previous government are accused of running down the foreign currency reserves. According to Prime Minister Mia Mottley, on 31 May, these stood at BD$440 million, or the equivalent of seven weeks’ worth of import cover. This is the main problem that the government’s comprehensive economic reform programme with IMF support is intended to address.

However, it is clear that there are numerous ways to solve a problem of a government’s budget deficit and the choice of option will indicate the political preferences of those making the choice. For example, the people of Barbados remain in the dark about the origin of this BD$15 billion of public debt. For each individual loan within the portfolio of debt, Bajans need to know, who borrowed it, how much was borrowed, what the interest rate was, what it was used for, how much has been repaid and how much is still outstanding. Bajans need to demand that the government make this information public so that we can judge for ourselves our responsibility for the repayments. Obviously, if money has been borrowed and used for purposes other than those stated in the terms of the original loan, then we are looking at the issue of odious debt for which Bajans should not be held responsible. Furthermore, if money has been borrowed and used to enrich politicians and private interests, then those who benefited from the loans are the ones who should take the responsibility for the repayments.

Another important point to bear in mind is that looking at the government’s finances alone does not give us a clear and all round picture of the state of the economy, since government revenue accounts for only some 30% of Barbados’s GDP. We also need to know what is happening to the other 70% of the country’s GDP in order to be able to make informed decisions going forward. Recently reported statements from Mr Eddy Abed, President of the Barbados Chamber of Commerce and Industry (BCCI), that there is some BD$8 billion sitting in the banking system in Barbados also needs to be factored into any solution. Bajans may well ask how it is that in ‘dire economic times’ the ‘private sector’ aka the local elite have the equivalent of 80% of the country’s GDP sitting in the banking system. If this is the case with the local elite, what is the situation with the foreign elites? We need information on all of this to be in a position to make informed judgments about how best to address the budget deficit.

With regard to the IMF, a careful reading of its Article IV report which was recently released by the government indicates that it is focusing its attention on attacking those streams of government spending which benefit ordinary people, such as public sector pensions. Bajans need to be aware that other options exist. A budget deficit can be reduced by increasing government revenue as well as by cutting government expenditure. For example, the government could increase its revenue by charging corporation tax on companies’ income rather than on their declared profits. It could also place a temporary moratorium on all tax concessions which are currently in operation. The important thing is that various options exist and the ones that are chosen reflect a political choice about whose lives and interests are important. The question is should decisions favour the working people of Barbados or those of the local and foreign elites.

In the new situation, it is essential that ordinary Bajans demand that their views and interests be fundamental in shaping any agreement with the IMF. This means being given access to information which allows us to make informed choices and demanding that any agreement reached with the IMF be put to a binding referendum in which the people of Barbados have the opportunity to make a decision on this crucial issue for the well-being of the country.

102 comments

  • pieceuhderockyeahright

    @ Disgusting Lies and propaganda TV (you name too long for de ole man to type pun de iPad heheheheh)

    You are correct insofar as she has asked for “berating SPACE” AND WILL RECEIVE SUCH FROM THE IMF

    I wonder ef de ole man should elaborate for you

    [[SQUARE BRACKETS TIME – WHY DE OLE MAN TYPE BETWEEN HERE AND DE NEXT SQUARE BRACKETS ONLY YOU AND I GINE SEE

    The Pause that Refresheth

    De ole man was wondering about Madamoiselle Prime Minister Mottley’s use of the words “suspending All Payments” on debt

    This is of critical import when you consider that there is a grace period associated with these loans that unless the country is already in that grace period then we are definitively in default ….AND THAT IS NOT A SECRET THAT THE DLP COULD HAVE KEPT TO ITSELF

    So de ole man said to meself “meself what is Madamoiselle Prime Minister Mottley doing?”

    And the answer came back “she is buying time”

    Stay with de ole man a while

    What payments are due? In what currency? Going (ostensibly) to whom?

    You did de ole man yet?

    I was did ask Mr. Bernard Codrington about if it was possible to not pay these contracts and kickbacks to contracted parties AND HE HAD TOLD ME NO BUT WHAPLAX…

    You did de ole man?

    Now why dis means in practice?

    IT means dat under the watchful eye of the IMF de incoming administration is going to be able to examine ALL DE SOVEREIGN DEBT OF BULBADOS and see all the arrangements OFFUCIAL AND UNOFFICIAL of Credit Suisse officials and Darcy Big headboy and Chris Stinkliar

    You did de ole man yet?

    Now unlessing Credit Suisse and others of the funding agencies wish to compromise their reputation on the international markets hey all need to come clean on the details of their diabolical financial arrangement with the former GoB

    As should all of the red of funders who want to have untarnished financing reputations (an oxymoron to be sure – a bank with a reputation dat be like saying David Come Sing Along is a lawyer with integrity and scrupples)

    But de ole man only sharing this with you Disgusting Lies and Propaganda don’t let de rest of the BU population know what we talking bout ok ?

    Man you ent even tell me dat I forgot the SQUARE BRACKETS]]

    Like

  • pieceuhderockyeahright

    @ the Honourable Blogmaster your assistance please…

    Like

  • Some DLP supporters suffering from PTSD.

    Like

  • Mariposa shiite!!!
    Both ac and DeLiar Worrell are adding insult to injury by their continued shiite talk into the affairs of Barbados.

    Here we have two shiitehounds who supported and encouraged the rampage of Froon and Stinkliar for ten long years …. facilitating and encouraging the most idiotic policies conceivable…. and now that the shit has hit the streets, and now that MUCH MORE INTELLIGENT people are trying to clean up the mess, …we have to endure these two ass lickers bitching about every little thing….

    The POLITE thing for these two vermin to do would be to go home QUIETLY and commit suicide.

    DeLiar had the GALL to suspend press conferences; to print money like some kinda parro; and to talk economic shiite about “international currency exchange protocols” that would be worthy of Dompey ….
    Now he come talking shiite about firing 15000 people so that he can keep his toy cars and big gratuity.

    As Bushie has suggested LONGGGGG ago, It makes much more sense to change the STUPID law that Arthur passed about not cutting salaries – and to reduce salary levels across the board to a nationally affordable level – than to dump 15000 brass bowl passengers into the sea….

    The press (and BU especially) should boycott De-Liar…just like he did to us when his short ass was in power….
    BB, ‘short-me-crutch’, moron…..

    Like

  • fortyacresandamule

    Government debt becomes more of a problem if most of your debt is owned by foreigners coupled with a weak floating currency ( Jamaica is a prime example). Luckily for Barbados, most of our debt, around 70%, is owned by the domestic financial sector and the NIS. Also, we have a fix currency regime that serves us well for over forty years, so the risk of currency depreciation is very low.

    The debt is high for sure, but the sky is not falling down as some would like you to believe. Jamaica is still in a more precarious situation than Barbados even with all their fiscal consolidation.

    Like

  • Go read barbados today editorial idiots
    In one week this woman has placed barbados in a serious economic manhole driven by political hamstring and self interest

    Like

  • Well Well & Cut N' Paste At Your Service

    Bushman…don’t worry, I got a remedy for all their vicious, criminal asses, as outlined in the Blogmaster’s article above…

    Ah got mysef a brand new broom and lots of sugar to make lemonade…lol

    Like

  • the tail dont wag the dog

    Like

  • “The debt is high for sure, but the sky is not falling down as some would like you to believe. Jamaica is still in a more precarious situation than Barbados even with all their fiscal consolidation.”

    Such an attitude caused the insolvency of Barbados.

    Like

  • Forty also told us that everything is OK with the Barbadian offshore financial sector.

    It is not.

    Like

  • Fortyacres,

    But our monetary policy is decided in Washington by the Fed, not in Bay Street or Church Village.

    Like

  • Hal,

    Most educated people in Barbados do not understand that a peg of 1:2 demands a productivity of 50% of the United States. The productivity in Barbados is next to 1:4.

    The excessive import taxes and duties are a tool of deceit to keep up the grand illusion of a stable and valuable Barbados Dollar.

    Like

  • Government also announced that it had appointed White Oak Advisory Ltd. to act as its financial advisor in the context of the debt restructuring process announced on 1 June, 2018.

    http://www.whiteoakadvisory.com/

    Like

  • Arrival Of IMF Mission & Appointment Of Advisor

    bgis June 5, 2018 banner, Top Stories

    Prime Minister Mia Mottley (right) in discussion with the IMF’s Bert van Selm (left) during a meeting at Government Headquarters today. To Prime Minister Mottley’s right are Minister in the Ministry of Finance, Ryan Straughan and Minister in the Ministry of Economic Affairs, Marsha Caddle. (C.Pitt/BGIS)

    Government announced today that a team from the International Monetary Fund (IMF), led by Bert van Selm, had arrived in Bridgetown on a three-day visit.

    The team will hold discussions with the Prime Minister and Minister of Finance, Mia Amor Mottley, Governor of the Central Bank of Barbados, Cleviston Haynes, other senior government officials, and representatives from the private sector and the labour movement.

    It is expected that during this visit the IMF mission will update itself on the current economic and financial situation in Barbados, ahead of discussions with the authorities, over a potential programme in the coming weeks.

    Government also announced that it had appointed White Oak Advisory Ltd. to act as its financial advisor in the context of the debt restructuring process announced on 1 June, 2018.

    The financial advisor is in the process of establishing initial contacts with affected creditors, and is expected to soon commence creditor engagement on the basis of the medium-term macroeconomic projections to be finalised by the Government in the coming weeks. In the meantime, all queries relating to the announced debt restructuring should be directed to the financial advisor using the email address barbados@whiteoakadvisory.com.

    The Government stated that it has held discussions with the rating agencies since last week’s announcement, and it is expecting that Barbados’ credit rating will shortly be adjusted down to Selective Default (SD), as is customary when comprehensive debt restructurings are announced.

    Information for creditors will be posted periodically here.

    Central Bank of Barbados

    Like

  • Look at Argentina: The country is approaching the IMF again after it defaulted in the early 2000s. So this might not be the last IMF programme for Barbados as well. A fourth and fifth might follow. Barbados is simply to small to survive as an independent nation without constant help of foreign lenders.

    It will be interesting to see what happens if the government raises the pensions and wages of public servants and defaults on various international loans and bonds at the same time. They are already fuming on the Cayman Islands …

    Is this the kind of – quote – “stimulating investor confidence” the GG outlined in her speech?

    I don´t think so.

    Like

  • fortyacresandamule

    @Tron.You are too sophisticated not to know that the overall premise of my argument is correct. Most developed countries in this world as we speak, are up to their neck in debt. They are not that worried because most of their debt is issued in the domestic currency and they tend to have a stable currency. Japan is a good example.

    I agree with you about our level of productivity. For sure, the fixed exchange regime has created massive distortion in the system and a false sense of economic success.

    Like

  • fortyacresandamule

    @Hal. Yes, Washington partially dictate our monetary policy. I used the word partially, because we still have some amount of capital control in place.

    Like

  • @ fortyacresandamule June 6, 2018 2:19 AM

    Dear Forty,

    Apologize for my huff and puff! I agree that most of the debts are local debts and this is good news, indeed.

    However, given this fortunate position, I do not understand why gov defaulted on the international loans as well.

    Like

  • pieceuhderockyeahright

    @ Tron

    Government has defaulted on its international loans as well so it can bring in its international paymaster White Oaks to oversee who gets paid what when.

    This is going to put all external sovereign debt ON HOLD so that all debtors INCLUDING THOSE DEBTS THST ARE DESIGNED TO BLEED THE ECONOMY TO FEED STINKLIAR & HEADBOY QUISLING will now be on hold

    This entity is now the de facto gatekeeper de ole man spoke to you about last week during Sunday C
    School classes.

    IT was at thst time de ole man was asking Mr Bernard Codrington about not paying loans.

    I do hope that you try to pay attention while you are in the RumShop else you will end up drinking piss from the new proprietor euphemism for the BLP under the guise of beer

    Like

  • Tron,
    With White Oak now giving external advice, and Caddle and Straughn being pictured meeting with the IMF, does this mean that Mascoll and Persaud have been sidelined? That their advice needs a bit more ‘external’ expertise?
    More important, what are White Oak’s fees for advising on restructuring our sovereign debt and what advice have they given. What expertise are they bringing to the table that Professor Persaud, Dr Mascoll, central bank technocrats or the taxpayer-funded academics at Cave Hill could not bring at a fraction of the cost?
    By the way, when I warned, that buying government bonds was putting ‘investors’ at risk, as usual, I was ridiculed. I mentioned the bankruptcy of the government and received an email from the late David Thompson chiding me for my view. Time is longer than twine.
    Government has now been in power for 13 days and apart from a respectable Queen’s Speech, filled with lots of flawed proposals and one or two good ones, has done no more than lots of PR stunts.
    I say again, and have been saying this since the scandal with Barrack, that the Bds$1.7bn domestic debt poses a totally different problem to that of foreign debt.
    With domestic debt we could just print money then manage the threat of asset price inflation. In the over-long speech, there was no mention of re-forming a Barbados-domiciled bank, another efficient way of managing domestic debt – with a balance sheet bank, creditors could be given current accounts limiting the amount of single withdrawals.
    Such a bank would also incentivise savers and retail investors, thereby a dynamic domestic operation. As to the foreign debt, currency derivatives could mitigate the hefty burden of that cost.

    Like

  • Apologies. I have now seen the Nation picture of the meeting with the IMF and both Mascoll and Persuad were there.

    Like

  • Piece Uh De ROck Yeah Right

    @ Hal Austin

    In sync as you forever seem to be with the statement “even a broken clock is right twice a day” you deliver some worthwhile material even amidst the rambling

    WHITE OAKS

    “…Opting for independence instead of a more bureaucratic structure has enabled White Oaks to thrive as a boutique firm with selective staffing, focusing on a high-touch experience for clients with more assets…”

    There is something to be understood here about a firm that is a derivative of IDS American Express.

    First you need to understand that IT IS NOT IDS and secondly this is a personal reference to a “boutique firm”

    The things to be examined here are numerous but the ole man will focus on a few that need to be mentionned

    1.Why the derivative and not the more stolid and solid parent?

    Because IN THE SCHEME OF THINGS Barbados is small potatoes with IDS the parent AND IT DOES NOT HAVE ANY CURRENCY WITHIN THAT ENTITY since we would not have passed their due diligence standards

    2.Cross Pollination Promises.

    Because of the relative miniscule size of the firm White Oaks vis a vis IDS there is a personal leverage being applied here that time alone will disclose. This boutique was chosen because of someone that they knew in the current administration.

    Certainly IF THE TRANSPARENCY POLICY THAT HAS BEEN ESPOUSED & COVENANTED TO DATE with the Bajan People, is going to be applied across the board, then we can expect to see the terms and conditions of the White Oaks Agreements.

    Any financial planner registered with the Securities Exchange Commission of the USA (and by extension a financial planning institution) would tell you that they work on a fees based structure which according to regulations CANNOT DISCOMMODE THE CLIENT so White Oaks at least will be on its P&Qs with respect to its GoB client.

    Notwithstanding any “promises” for unlike we jokers here in Barbados, de ole man ent say de FSC nor the FTC in green Hill, the SEC ent an entity to ef with

    But we can only hope that the current administration WILL BE FORTHCOMING WITH THE DETAILS OF THE White Oaks engagement contract as IT HAS PROMISED TO BE WITH THE DECLARATION OF THE ASSETS OF THE NEW MINISTERS heheheheheh.

    The second aspect of these “promises” can be imputed based on the relative anonymity of this firm in the spectrum that is the Movers & Shakers domain.

    It is what White Oaks’ “high touch experience with clients…” portfolio has already delivered to the current administration specifically what it had brought to the cross polination table that has resulted in their being awarded this “pick”

    You jes doan hire a Financial Planning firm pun a willy nilly feeling like how DownLowe was did doing wid dat white woman of (he-nevah-had-a-white-meat-yet fame)

    Speaking of “picks” de ole man want to know effing any uh wunna cud put in a word with these people so dat i cud get a “pick” too but I guess dat dem Stoopid Cartoons dem presented “a bridge too far” heheheheheh

    I shall lift up mine eyes unto the hills from whence cometh mine help, my help cometh from the Lord who hath made the Heavens and the earth, He Shall not suffer mine foot to be moved, yea He that keepeth Israel, SHALL NEITHER SLUMBER NOR SLEEP

    Like

  • The Honourable Prine Minister is now having to deal with the economic mess brought about by the Doolittle administration.It is worthy of note that Courtney Blackman referred to himself in his role of Governor of the Central Bank,as a ‘creature of the Minister’.That was a clear indication that the Minister was in control.Fast forward to post ’08 and the roles have been reversed.The Governor now has two superior unknowing officers to deal with and in recognition of that situation took it upon himself to assume control of both the fiscal and monetary policies of the doolittle government.A classic case of the tail wagging the dog,doing the dog,publishing his own labour statistics,denying the press a presence at the table,expending scarce funding to certain unproductive and free spending State Enterprises and when the economy refused to respond positively threatened to pull the printing machine plug on the clueless duo.The garsun boy had the last laugh on the harsun boy.
    It appears,given the earth shattering rebuke of their combined folly which some called called voodoo economics,the harsun boy has withdrawn until further notice.The current Ministry of Finance is now properly staffed with serious professionals.

    Like

  • The Madam PM administration has created another first !

    Now 10 days into the life of her administration Madam PM has witnessed 2 downgrades from the rating agencies !

    At this rate – Barbadians can reasonably expect that by General Elections in 2023 …….the country can be expected to record 20,000 downgrades !!

    Which is not too bad ……when one considers :

    A 30 member Cabinet !
    5 Finance Ministers in Mottley, Straughn, Caddle , Mascoll & Persaud !

    Well ….

    It’s
    Mia ‘s
    Fault

    IMF !!!

    Like

  • Madness Dat default on govt debt. No Mia you can not con the international financial institutions like you fooled the barbadian people
    What is happening is just the beginning of the hurt and pain coming down the pipe.
    Wuhloss my belly hurt my bonds have become junk in one week
    Thanks Mia you sure know how to make bitter

    Like

  • mariposa you may be right but give them a chance to see if they can right the ship. look at the US things are being done very unconventionally , the media bobble heads said the sky will fall but it has not and the economy is doing well. there will be lots of time to gloat if thats what makes you happy but hoping your new prime minister will fail is absurd if your money is really invested on the island.

    Like

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