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Did We Listen to Mia?

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Submitted by Kemar J. Stuart, Banking and Finance Student, University of the West Indies

My fascination with finance and budgetary analysis started started at secondary school because of the late PM David Thompson and with my persistence, I annoyed a UWI student at the time to tell me everything he could about finance.

In 2018 I am a benefactor of a Banking and finance education where conversations surrounded the policies of last MOF Chris Sinckler and his perceived financial mismanagement. The highlight being then opposition leader Mia Mottley going as far as no confidence motions, marches and even offering a sound economic point in which I will address.

Most notably in the 2016-2017 Official Budgetary Reply delivered by then opposition leader Mia Mottley on August 17 2016, where she offered a stellar point to then MOF Chris Sinckler. I quote “there is something called a Government Sinking Fund for foreign debt” ‘established under the External loans Act’ “which makes it absolutely clear that proceeds of the Government sinking fund for foreign debt can only be used to service foreign debt”. She highlighted this figure for this facility to be $322 million. She went on to say “the reason why this parliament passed a sinking fund for foreign debt is to make sure that when foreign debt becomes due and payable that the Government of Barbados is in a position to be able to pay because every year it puts aside 2 1/2% of whatever the foreign debt is.”

After such a beautifully orated economic and fact based solution Barbados received it’s first credit default on foreign debt courtesy of ‘I am not sure who’ since there are 3 Finance Ministers and 2 special economic advisors.

For clarity and to give the financial community some sense of stability, can any of the five economic wizards provide a financial analysis of the default with an explanation if the above recommended advice by then opposition leader Mia Mottley was considered before default, the gain/loss on the country’s international debt portfolio and derived benefits from defaulting ,lastly the financial projection of the debt portfolio given that we did not default and gain/loss Associated. Given the butchered approach to financing our interactional debt obligations what if the international community does not take any debt restructuring offers ? Is our special drawing rights going to be sold under the IMF condition to provide balance of payments support if the BERT plan fails?

Through the five of you one of you need to be man/woman enough to face the many possibilities that our financial fortune faces and gives us the raw deal surrounding our international capital market capacity

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122 responses to “Did We Listen to Mia?”

  1. Mariposa Avatar
    Mariposa

    Can some body explain to me what does Mia Mottley expect from Corporations given the huge tax cuts
    I suppose after many meetings and hand wringing Corporations were able to convince govt that getting tax cuts would free up their hand in helping to create growth
    However the test of all this trickled down economics was already proven to be a flop in barbados and would be so again
    Most likeky with a dwindling work force these corporations who easily convinced govt(again) of their serving of the pie would resort to doing little or nothing pointing to weakness and uncertainty in barbados economy with the presumption that high levels of unemployment would decrease their profit margin and lessen their chances of providing a stable strategy for creating growth
    One can also predict that come income tax time some of these corporations once again would have their hands held out as they provide balance sheets to govt internal revenue showing losses

  2. PoorPeacefulandPolite Avatar
    PoorPeacefulandPolite

    Slashing corporation tax is going to prove to be a masterful stroke in order to encourage foreign direct investment in the island. At the same time Barbados will be free of OECD accusations that we are encouraging tax avoidance schemes by international trading companies. Shipping companies for example will fairly and freely be able to register as Barbadian businesses. The opportunities are vast.

  3. Mariposa Avatar
    Mariposa

    Understood the value of having foreign investment
    However the economic value of the tax cuts also undermines the fact that along with lowering the tax that foreign investors also depends on govt aid in the form of concessions

  4. David Avatar
    David

    You are aware the former government started the process to reduce the tax to conform with an international expectation?

  5. John Avatar
    John

    It isn’t really foreign investment because there is no long term plan for the funds attracted!!!

    But, Barbados cannot survive without it because it provides foreign exchange and Barbados can’t survive without Forex.

    What the offshore sector does do is it raises the value of land and the cost of building.

    Land Tax often then applies the coup de grace to a small land owner who gets forced to sell!!

    … and it isn’t even the wicked plantocracy that is responsible!!!

  6. Hal Austin Avatar
    Hal Austin

    There is no international obligation on corporation taxation. The important issue is that to be competitive corporation tax must be competitive.

  7. John Avatar
    John

    In a way the corporation tax is like land tax, administered by a corrupt government bankrupt of productive ideas.

    It really isn’t any thing morethan stealing.

    The OECD may actually have done us a favour by holding up its clothes and forcing the change.

    The offshore sector brings corruption and money laundering on a scale many of us cannot imagine!!

  8. Mariposa Avatar
    Mariposa

    David can u give your input as to why the corporation tax is a good measure
    All i have to depend on is a similar measuring stick which was used as a guidance to build and create growth for barbados which never came to naught
    On paper all these measures seem plausible but when the rubber hits the road these corporations rely on loopholes to.protect their better interest feathering their own nest and leaving country and people holding an empty basket

  9. John Avatar
    John

    A foreign corporation can set up here make profits and pay 30 times less than a local corporation.

    Not much actual physical money making happens here, just transactions are booked here and at the end of the year a profit is declared.

    Minimal tax is paid here and double taxation treaties prevent bigger countries from getting their share of the cake.

    The OECD as I understand it is saying too much capital outflow and money hiding from our countries.

    To many funny things.

    Forget the special legislation to promote crime and corruption!!

    Not saying the OECD is saintly, just that it is looking out for its own members interests.

    Wasn’t SSS and the flyovers not a “Society with Restricted Liability”?

    Did you know that up to 1982 (Tom time) the 1910 companies act required shareholder returns be made every year!!!

    The 1982 companies act did away with that and allowed the secrecy and underhand dealings to occur!!

    Just as Barbados jumped in 1982 controlled by large foreign private interests and changed the companies act, it has to jump now at the order of the OECD and put an end to the abuses that have taken place.

    Neat thing is it has reduced its own labour costs to reflect a likely fall in tax revenue.

    In the longer term locals may just make a go of the economy without having to support an inefficient GOB and its socialist programs!!

  10. John Avatar
    John

    Mariposa
    November 22, 2018 9:46 AM

    David can u give your input as to why the corporation tax is a good measure

    ++++++++++++++++++++++

    Good or not, the GOB has no choice!!

  11. Mariposa Avatar
    Mariposa

    Wuh de fuk yuh mean by Good or Not the govt had no choice
    Is that the new matra or selling point which this govt going to use to silence or drum out criticism of govt policies
    Are u John f.king real
    On and on starting from May 24th this govt have been juking poor people in the eye while the rich fatten their bellies and duffus like u telling those who are suffering govt have no choice
    John you need a plunger pushing up you ar.ss to remove the shi..te you continue to post on BU
    Next you be telling all and sundry when govt stick another poisonous needle of higher taxes on the poor that govt has no choice
    Are barbadians now supposed to live with that kind of drastic change and love it

  12. T.Inniss Avatar
    T.Inniss

    I don’t know if Vincent or Wily coyote could enlighten us more on that Government Sinking Fund for Foreign Debt under the External Loans Act.

    Taken for granted that this is indeed so – then the $322 or more million dollars would have been available to service the upcoming foreign loan payments like the Credit Suisse loan.

    Remember this was one of the excuse used by Mottley – along with the upcomimg Hurricane Season as reasons why she defaulted on the loan.Namely she didn’t have any money in the Till for foreign loan payments.

    The media namely The Nation Newspaper and especially Ellis,Price and Wickham on VOB ran with this and kept pushing this reasoning at those the persons who complained and baulked at this unprecedented move to ‘default on our Debt’ Later another reason was thrown it by the BLP propogandists on Air and Press – that it was either default or devaluation that Mia was faced with

    This is why I am saying we need persons like Owen Arthur and Prof.Emeritus Michael Howard to speak to these issues.At a time like this we miss Wendell Mcclean.But where is former economic Professor Andrew Downes – can he not give back to his country without being paid ?

    Mia Mottley is a Liar Extraordinaire – her words can not be trusted ( since May 24th there are so many instances of that) – AND WE CANNOT RELY ON THE MEDIA TO DO THE RIGHT THING – SINCE THEY HAVE BEEN BOUGHT AND SOLD – AND ARE SAFELY TUCKED AWAY IN HER FRONT POCKET.

  13. David Avatar
    David

    @John

    Agree with you. These matters were agreed to many months ago. The challenge is how can Mia implement with minimum disruption. You can’t borrow money and expect no strings to be attached.

  14. Donna Avatar
    Donna

    For sure, Wendell McClean is very much missed!

  15. WARU Avatar
    WARU

    “Forget the special legislation to promote crime and corruption!!”

    Ah well, they did not think they were being watched. Like someone was going to miss where Mia’s lawmakers tried to legislate crime and corruption into law to continue enriching themselves at the expense of the most vulnerable in the society.

    Ah think they missed the memo where Europe and North America will not be so dumb as to allow corrupt ministers and lawyers in Barbados to force a whole population of vulnerable bajans onto their welfare rolls for international aid indefinitely ….and…..ESPECIALLY not to enable politicians and lawyers in their crimes and corruption…that’s for sure.

  16. Georgie Porgie Avatar
    Georgie Porgie

    re You can’t borrow money and expect no strings to be attached.
    HOW YOU MEAN?
    MIA CAN AND MIA DOES

  17. Mariposa Avatar
    Mariposa

    All these govt measures would eventually lead to a lowering of barbados lifestyle which would lead to rise in poverty
    The fall out being more mental health issues because of stress related issues brought on by govt measures against citizenry
    Overall the detoriation of many barbadians lifestyle because of luck of funding or wages to provide to households
    The safety net which when looked upon to provide assistance would be intself slow or unable to provide help
    Going forward more income inequality would create an enviroment of hate and resentment
    with crime escalating faster than govt can control
    So given that all these new measures to be generated by corporate tax cuts are supposed to benefit the country one cannot overlook the time factor which would take a long time to see significant gain while closing eyes to policies already implemented against the poor which can devalued or outspace any significant gains related to corportion tax
    What is at stake when all is said and done is if govt can control the negative fall out from austerity measures against the poor while trying to hold the hands of the rich whereby there measures would take a long time to see posituve gains

  18. Mariposa Avatar
    Mariposa

    From Michael Howard fb page
    …………………………………………………

    The reason why these low corporate tax rates are so detrimental to the growth of the Barbadian economy is that local corporate firms, and ones resident in Barbados like Massey, are users rather than earners of foreign exchange. The international business companies and offshore banks contribute to foreign exchange. The artificially very low tax rate will now be a subsidy for the use of foreign exchange. Some companies will expatriate their profits like the commercial banks, and after allowances for depreciation etc, transfer pricing and profit shifting, will contribute almost no revenue to the Barbados government. Thus Barbadian workers will have to bear the full incidence of taxation.

  19. peterlawrencethompson Avatar
    peterlawrencethompson

    @Mariposa
    Michael Howard is correct. But so is John… if Barbados is to remain an open market economy linked to the rest of the globe. The alternative is a state led isolationist posture like Cuba, and I don’t believe that most Bajans want that.

  20. peterlawrencethompson Avatar
    peterlawrencethompson

    If Barbados is to remain a capitalist economy then neither the BLP nor DLP had any choice but to fall in line with the OECD measures to reduce tax leakage from their own economies.

  21. Mariposa Avatar
    Mariposa

    Btw questions
    Are these overseas tax experts from the OECD being paid from taxpayers coffers
    If what is/ was the reason for govt to employ a barrage of other experts in the first go around
    Now are we to buy into a notion of There are not enough hands in govt ministry to lighten the work load while in the mean time govt cut the a.ss of the bajans putting them on the bread line

  22. David Avatar
    David

    Some issues are above the pay grade of partisans. You borrow the money expect strings to be attached.

    If we do not borrow to stimulate growth what?

    Barbados is a retail distribution shop. We do not earn enough forex to sustain a way of life we have become intoxicated. We will purge under this administration and 15 years from now we will be back here under the duopoly arrangement.

  23. Mariposa Avatar
    Mariposa

    Michael. Howard fb page

    The burden of taxation in Barbados has now been placed completely on the backs of the struggling Bajan masses, as the OECD injected urgent fear into the ruling labour party. Local Corporations now will pay rates below 4% profit tax, compared with 40% top income tax rate for individuals.The corporate elite is jumping up and feeling that it is now living in heaven.

  24. T.Inniss Avatar
    T.Inniss

    THIS MIA MOTTLEY ADMINISTRATION NEED TO TELL US THE TAXPAYERS WHAT IT IS COSTING US TO HAVE WHITE OAKS FOREIGN FIRM – AND WHAT ARE WE GETTING FOR THIS HUGE PAYOUT TO THEM – BECAUSE WE KNOW THESE FOREIGN FIRMS DON’T COME CHEAP.

    DID RAWDON ADAM OR AVINASH PERSAUD GET A FINDER’S FEE FOR BRINGING WHITEOAKS TO BARBADOS ?

    PEOPLE CUSSING FREUNDEL AND STUART BUT WHEN MIA IS FINISHED WITH BARBADOS – THE DEBT WOULD HAVE INCREASED EXPONENTIALLY – AND WHAT WOULD WE HAVE TO SHOW FOR IT ?

    WE NEED TO HAVE SERIOUS DISCUSSIONS ABOUT THESE SERIOUS ISSUES.

    A LETTER TO THE EDITOR IN TODAY’S NATION SPEAKS TO THE BURDEN OF THESE TAX WRITE OFFS AND CORPORATION TAX REDUCTIONS – RESTING MAINLY ON THE WORKING POOR AND LOWER – MIDDLE; MIDDLE CLASS.

  25. peterlawrencethompson Avatar
    peterlawrencethompson

    Actually, what I wrote above is wrong… we did have a choice. We could have chosen to kill the offshore financial sector and do without the thousands of jobs and $100 million in tax revenue that it currently provides.

  26. David Avatar
    David

    @T.Inniss

    Good luck getting answers. Bloggers asked the same about CAHILL to name one example.

  27. FearPlay Avatar
    FearPlay

    I am so glad that there was a change of government earlier this year. Why? Were it not for a change in administration, poor Marposa would have been unable to show the sudden burst of concern for the economy, sloppy governmental management, graft, roadworks, and arrogance. How refreshing to see your concern not that the scales have been removed from thine eyes.

  28. peterlawrencethompson Avatar
    peterlawrencethompson

    @Kemar J. Stuart
    The Government Sinking Fund for foreign debt is a red herring. The core fiscal problem in Barbados was the high level of debt service payments… using the sinking fund to service foreign debt would do nothing to reduce those debt service payments. The default is the way that the GOB used to reduce debt service payments.

  29. T.Inniss Avatar
    T.Inniss

    David

    Are you seriously comparing Cahill a failed project which did not get off the ground – to this frightening set of borrowing and alarmingly high and increasing cost.

    What was it we were told a few weeks ago – that between June and the end of September – Government has racked up about $74 million dollars in arrears to foeign commercial creditors – this happened after Government suspended the debt.

  30. T.Inniss Avatar
    T.Inniss

    Can we seriously compare that with a straight face to the Cahill situation ?

  31. David Avatar
    David

    Yes, the modus operandi is the same.

    If we do not borrow where is the funding for development to come? How do we service the loans at high rates?

  32. Vincent Codrington Avatar
    Vincent Codrington

    @ David BU

    What did Mia say again?

    The student wanted to know if the Sinking Fund was being topped up as required by law. If so, is it adequate for the purpose for which it was set up ? This is a matter of fact. As a student he should have gathered that piece of information himself and shared it.

    But what is the real question he meant to ask? Hence my question : What did Mia say?

  33. Mariposa Avatar
    Mariposa

    Don’t pay David any mind he clutching at straws while using big stick to knock down old fruit
    The fact remains that all these experts upon experts are alliging barbados economy with models patterns and trends to big economies that have large productivity and can buy and trade in small or large markets
    Barbados economy does not come close to fitting into those models and patterns of large economic countries
    As a small nation our biggest productive market is Tourism outside of that we have nothing to incentive our economy
    If after all the tax cuts mo are given to shore up our economy we still have to rely on a favourable global economy upon which investors look upon before leaping feet forward into a weak small nation economy
    Right now the stock market is having fits and doubts

  34. Mariposa Avatar
    Mariposa

    I mean with all the free education all that leaders can formulate is a policy of borrowing
    Nobody needs an education to borrow
    All kinds of certification and no one with and education with which to build Barbados has knoweldge or commonsense to bring a model that is not dependable in borrowing
    What a god dam shame
    Worst yet Mia was the one shouting the longest and hardest about govt debt
    Now she has joined the gang of clueless visionless leaders she so accustomed to calling (all)for increasing debt

  35. Vincent Codrington Avatar
    Vincent Codrington

    @ PLT at 12 :32 PM

    @ David Bu at 1 :15 PM

    Had the funds been borrowed to finance growth and development they would have generated revenue to repay the principal and interests. But were they?

  36. T.Inniss Avatar
    T.Inniss

    Hmmm.Interesting indeed -says the Cat who ate the rat.

  37. Enuff Avatar
    Enuff

    David
    Have managed to source the Sandals’ tax concessions agreement?

  38. Georgie Porgie Avatar
    Georgie Porgie

    Now she has joined the gang of clueless visionless leaders TO WHICH SHE REALLY INATELY BELONGS………….SINCE SHE HAS ALWAYS BEEN A clueless visionless leader I.E AN INFERIOR SUPERIOR

  39. John Avatar
    John

    David
    November 22, 2018 1:15 PM

    Yes, the modus operandi is the same.
    If we do not borrow where is the funding for development to come? How do we service the loans at high rates

    +++++++++++++++++++++++++++

    What development?

    We are borrowing so we can eat, drink and be merry and drive about in fancy cars!!

    There is no development plan!!

  40. T.Inniss Avatar
    T.Inniss

    Hey,hey looka this thing though nah !

  41. WARU Avatar
    WARU

    Then the accusations against the lending agencies are also a cause for concern….there never was any plan for development….53 years later post independence and the islands are still labelled “DEVELOPING”…hint, hint….cause ah done spelling out everything..

    Black led islands and organizations make the same damn mistakes, like it is a mental block they walk around with in their heads.

    https://shar.es/aa2uFy?fbclid=IwAR1vBf6oni0HLO0zaKbJiswqrqaCetgFHUGGtQDyFq_gL04sMTC4yWTgh0M

    “Anthony, a former finance minister said the bank has been doing a disservice to St Lucia and the region, telling legislators: “I say unashamedly that I do not support the current management of the Caribbean Development Bank.”

    “The Caribbean Development Bank has departed from that and the Caribbean Development Bank has lost sight that the reason for its existence is to facilitate the development of small Islands,” he said Tuesday, as he contributed to a government motion authorising the Minister for Finance to borrow from the CDB an amount not exceeding US$4.9 million.

    Anthony said there’s nothing that the CDB loves more than consultants, adding that every single project must have consultants.

    “It is an industry and the Caribbean Development Bank in particular has a fascination for Canadian consultants,” he said, adding “it is not often you get them appointing regional consultants except when it suits their purposes for example assessments of poverty reduction, they may use a firm out of Trinidad.”

  42. Mariposa Avatar
    Mariposa

    The same way govt can find money by digging deep inside the arss hole of everday citizens to pay down debt and give away tax payers money at free will
    Could have been and should have been the same formula used to develop barbados
    It seems govt has no problems dragging all and sundry over the coals for want of paying l financial institutions
    Errol Barrow model on development for barbados was simple and gave a first incentive through education fir barbadians to give back and help build a barbados of their own

  43. Hal Austin Avatar
    Hal Austin

    The question is: Who does Mia listen to? There is a thin line between over-confidence and arrogance.

  44. David Avatar
    David

    @Vincent

    Besides being provocative the relevance of the question is not obvious given the text submitted.

  45. David Avatar
    David

    Bulk of the borrowing was to service debt and topup dwindling forex reserves. You know this Vincent.

  46. David Avatar
    David

    @enuff

    Still searching for the link.

  47. David Avatar
    David

    This is an accurate statement John.

  48. Hal Austin Avatar
    Hal Austin

    @T. Inniss (12.39)

    You are spot on. Tears before bedtime. This government is like a rudderless ship.

  49. David Avatar
    David

    @T.Inniss

    3S, VECO it does not matter the party, the dishing of contracts under questionable tendering arrangement is the same.

  50. John Avatar
    John

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