Some have been following the intense negotiations in motion between the government of Barbados and external bondholders. Whether one agrees with the decision of the Mottley government to trigger SD, the bottomline is that this is where we find ourselves and ALL Barbadians must support the effort of the government through its agent White Oaks to close the best deal for the country.
Barbados is not the first country to trigger SD and will not be the last, let us get over it. Debt restructure comes in all shapes and sizes, if we breath some life into the economy the opportunity to improve credit ratings will come.
It is unfortunate some members of the political class prefer to nitpick instead of rallying around the flag at this juncture. The decision was made, move on!
White Oak is being paid very well to negotiate the best deal for Barbados. They have done similar deals for other countries and the principals are known to those sitting across the table. That some will want Barbados to cave to the creditors because we are the defaulter and therefore should accept terms offered by the lender is nonsense.
However this blogmaster agrees there is a need to demystify the matter for the average Barbadian to assist with informing a national debate on the ramifications of a protracted negotiation.
Here is another article planted in the international press by the other side to pressure the government of Barbados.
-David, Barbados underground
Creditors prepare to push back on Barbados debt proposal
By Miluska Berrospi
NEW YORK, June 12 (IFR) – Investors are preparing to push back on a restructuring proposal released this week by the government of Barbados, sources told IFR on Wednesday.
After months of discussions with creditors, the government, which suspended debt payments last year, laid out on Tuesday two options for holders of its 7.25% 2021s, 7% 2022s and 6.625% 2035s.
But creditors, which had feared the government would launch an exchange without their consent, said such terms were unsatisfactory.
“We hope that before they actually launch an offer, the government will re-approach us and try to reengage in conversations,” said an investor involved in the process.
“If they launch something we’re prepared to reject it and wait,” he added.
The creditor committee comprising both dollar bond and loan holders are preparing a response for later this week, sources said.
“The government of Barbados has improved the proposed terms as much as it possibly can given its commitment under the IMF-support program,” the Barbados government said in a statement on Tuesday.
In October 2018, the International Monetary Fund (IMF)approved a US$290m bailout for the Caribbean nation.
“We are disappointed that they’re taking the tone that they are. We think it’s damaging to the country and to foreign investment,” added the investor.
Creditors would have about three weeks to respond were the government to launch a formal exchange offer on the options presented.
No payments have been made on outstanding debt since Prime Minister Mia Mottley took office in May of last year.
The country restructured around Bds$12bn (US$6bn) of domestic last October.
@ Wily Coyote June 17, 2019 5:42 PM
Much worse than the absolute debt level is the absence of any economic growth compared to 2008. The relative level of government debt compared to GDP will thus hardly decrease apart from debt cuts.
Economic growth will only be achieved if the state apparatus is reduced in size, regulations (e.g. the disastrous, outdated protection of workers or minimum wages and numerous building regulations) are softened or abolished altogether, and if large parts of the state economy are privatized (i.e. sold or better liquidated). Barbados must abolish at least half of all laws, rules and state institutions.
The economy also needs greater tax incentives. Imports for the production of export goods must remain tax- and duty-free. We must shift the tax burden entirely from entrepreneurs to employees.
With the current encrusted structures and poor working ethic (as a result of inadequate education and of an excessively high tax burden), there will be no economic growth. I have been looking for growth all over the island for 10 years with binoculars and a microscope. So far, however, only the debt and the termite hills have grown. Nothing else.
So far it has been the state religion to generate economic growth through new debts and even more lazy civil servants. Thank God no one believes the false idol Barrow anymore. His time is up. It is now time for our honoured Prime Minister to open a new chapter for the island under the banner of austerity and to move forward courageously. Let us set up the demolition unit and remove the welfare state with all its flaws so that people can breathe freely again.
A first start should be to abolish the false public holiday for Barrow. He did far more harm than good. We need new heroes and new role models. We do not find them in old history books. Our Prime Minister must now lead the country into freedom and become a national hero herself. But she will only succeed if she overcomes the lazy caste of civil servants and throws large parts of the welfare state into the sea.
@ John A
You are being generous. If I were the creditors, I would demand 100 per cent of my money and give them a deadline to pay. If they fail, I would sell to a vulture fund at a discount. Easy. Let them battle with the vulture fund.
That is exactly what Barrack should have done with the previous government.
However one can easily say that PR was giving some form of economic easement from the creditors similar to what Haiti received because of the disaster
Yes I believe that is what many will push for. But they also know the rates of return they got from a desperate sinkler, were a bit higher than what the market would of yielded at the time. I feel they would of taken an offer in the 5% range without the ” disaster get out of jail free clause.” Since then though they have been hung out to dry for 13 months without a cent and now offered 2 options with no guarantee in the event of us getting a little heavy rain.
To bring them now to a table for settlement is not going to be as easy as if the matter was dealt with differently.
I guess the learned well paid negotiators learnt nothing from the Argentina scenario.
White Hoax what a joke
What a scenario. A country in debt decides not to pay its debts and it’s supporters say : don’t pay; its poker; its draughts; its like playing dominoes ; somebody has to blink; other countries owe too; we ain’t the first and we won’t be the last……….
The other option you mentioned of selling the debt in block to vultures could also become a reality especially based on these 2 offers which guarantee nothing in the event of rain. Let me explain why I say that.
Offer one for example offers the creditors only 66% of their capital over several years, assuming the disaster clause is not played.
Is would actually be better to sell that debt, at 50 cents on the dollar to a vulture and walk away than keep it over the next 20 years. So yes this government and the highly paid W0 are sailing close to having to possibly deal with guys that will cease your underpants on the line to get paid.
@ John A
Investors in treasuries are usually insurance companies and pension funds. They depend on their returns to meet their obligations. if you try to punch above your weight you must expect to be punched back. No forgiveness.
@ Tron June 18, 2019 9:51 AM
You are an ‘enfant terrible’ of the outrageous kind! A real maverick in the Bolshevik-like vanguard in the (R)evolution to kill off the Bajan economic dinosaur.
But you are omitting one vital ingredient from the planned economic coup d’état?
Where is the monetary fuse (blasting cap) to trigger the dynamite of necessary change?
MAM is just the dynamic Nobel prize carrier of the political sticks of nitroglycerine.
An ‘official’ devaluation of the Mickey mouse dollar would surely blow the top off the well of the current economic morass.
Let it, by fiat, find its ‘natural’ place value in the brave new Monetary’ world!
Why wait until the Bajan dollar is removed totally from the draughts board by the rising Sun King called “E-money”?
Problem is we got this misguided idea we are heavy weight when in fact we in the super light weight class.
Devaluation is only a matter of time. Even if the negotiations with the international creditors are successfully concluded, we still have a large state apparatus. Has the honourable Prime Minister not promised her civil servants new housing? She pours oil into the fire, where she would have to extinguish it with special foam called austerity. As long as the people on the island believe that they do not have to make an effort because the state will take care of them, productivity and work morale will remain at the lowest level.
Nobody should understand my statements as criticism of our esteemed Prime Minister. On the contrary. She has already taken many right measures – unlike the last government. But we do not want a 5% salary increase for civil servants and in return higher taxes. We have to come to the end of the road. We need a purification of the state apparatus which is just as brutal as the debt cut for the locals with their worthless state securities.
I very much hope that our honourable Prime Minister will develop her reform plans further and present new wonderful steps towards liberalising the island once negotiations with creditors have been successful.
@David. The reason Jamaica has become the poster child of IMF austerity measures is because it is the first time in Jamaica’s history the country has managed to achieve macroeconomic stabilty. To be fair, this is a massive accomplishment by the government of Jamaica given where they are coming from.
However, the economy still has a long way to go. Its inability to grow in a robust manner is one such drawback. The miniscule 1.5 %
GDP growth is just not good enough.
Jamaica has managed to reduce it debt stock and ratio without handouts and haircut from 150% in 2013 to 95% today by having the highest primary surplus in the world (7% of GDP) along with a restructuring of its domestic bonds ONLY. The restructuring process was done without a haircut cut on the bonds.
Thanks, this is the point we want those here pointing to Jamaica as the model to understand.
The purpose of foreign reserves is to meet liabilities, not just for show.
To meet those liabilities we can trade on the derivatives markets. Simple. (Unquote).
HMMMM! That simple, is it??
How come China has over US$ 3,095,000 million in foreign reserves?
How about Singapore’s US$ 293,889 million while Barbados cannot even report theirs to reflect the current position?
Who are the China and Singapore external lenders requiring them to build up such large reserves to meet ‘those foreign liabilities”?
How come Barbados, according to MAM and her finance sidekicks, have argued convincingly that the Bajan dollar was staring the bull of Devaluation in the eyes hence the decision to default on the foreign loans?
Why her highly paid economic consultants did not recommend that the little foreign reserves left at the end of April 2018 be used to meet the then due liabilities?
Foreign reserves are kept as a sign or symbol of a country’s financial stability and economic strength. It’s a country’s patrimony for economic rainy days.
This is especially so for countries (like Barbados) whose economic activities are largely based on the importation of goods and services, including food and oil.
The trick is to ensure that the reserves are accumulated through the earning of forex (sale of goods and services to foreign customers) and not through borrowings from loan-shark creditors like what Barbados has been undertaking for the past 20 or so years.
For Barbados it’s time to repay the piper(s) who would soon be calling the Devaluation tune.
It’s time to be weaned off living on foreign people’s (borrowed) monies.
Sweet life, aint long life!
@ fortyacresandamule June 18, 2019 11:59 AM
It is important to read that Jamaica has abstained from a debt cut and is still on the path to recovery.
In Barbados such an achievement would be unthinkable without a massive debt cut, if we consider the population that howls about every little social cut. They are not used to any deprivation and believe that they have the right to celebrate at other people’s expense. Not only do we have an ISO Taliban on the island. No, about 90% are as reform resistant as the Taliban in Kandahar.
It is now the right time for our Prime Minister to get the population in the mood for ten more years of structural reform.
Those who lack a lot need to worry less.
Please stop that foolishness about the event of heavy being a disaster
A Disaster is a devastating hurricane, earthquake, or tsunami
key word is DEVASTATING
It is patently incorrectly to state that this is the first time that Jamaica has achieved some form of economic stability.
It is an historical inaccuracy as well. Jamaica had a stable and vibrant economy only equaled to Tand T before the onset of economic difficulties in the 80s.
Quite frankly it can be successfully argued that most economies in the region started to sputter around the same time. Barbados included.
Trinidad and Tobago because of the oil boom held its own until quite recently.
Jamaica was a bauxite exporting country and for sometime the leading tourist destination in the region.
Stability here does not suggest an endorsement of the economic system. Many believe that when Manley flirted with Cuba and socialism the economy was sabotaged. Seaga emerged as the darling of the USA and all hell broke loose.
Just saying we should stick to facts. Jamaica has not and probably will not recover because of any IMF program.
Kindly engage Jamaicans before making such outrageous conclusions.
Also remember in our case, the real date to judge recovery is 2033.
Patently incorrect not incorrectly
SHANGHAI — China reduced its holdings of U.S. government debt again in April even as Beijing’s gold reserves continued to grow, diversifying away from the dollar as ties with Washington fray.
The $7.5 billion dip on the month brought China’s total Treasury stockpile to $1.11 trillion, down $90 billion from the most recent peak in August 2017. This follows a roughly $10 billion decline in March.
The downtrend in recent months parallels the escalation of the trade war between Beijing and Washington, even as the latest data precedes the breakdown in talks last month that led to another round of tariffs. A shrinking current-account surplus has left China with less wherewithal to buy Treasurys, and Beijing appears to have decided that overextending itself to do so is unnecessary given the souring bilateral relationship.
But few other options are available for stashing large amounts of capital, and selling off U.S. government debt too quickly would risk further antagonizing Washington. Such a move also would drive up long-term yields, reducing the value of China’s remaining holdings.
Rather than dumping Treasurys as a way to gain leverage in trade negotiations, Beijing seems to be taking a subtler approach through trimming its holdings by $20 billion or less per month.
Some of this capital is going into gold. China’s gold reserves have grown for six straight months since December, the first time the country increased its holdings of the precious metal in more than two years. Russia has made similar moves, slashing its dollar-denominated assets while purchasing gold as essentially a borderless currency.
China’s Treasury stockpile long stayed above $1.2 trillion, but after the yuan’s sharp depreciation in 2015, Beijing is believed to have sold some of the securities to fund intervention to shore up its currency. The country’s overall foreign-exchange reserves dropped below $3 trillion, though the bleeding was stemmed by controls aimed at curbing capital flight, including restrictions on overseas acquisitions. Chinese Treasury holdings bottomed out in January 2017 and returned to $1.2 trillion that August.(Quote)
@ Hal at 1 :32 PM
Are we moving back to the Gold Standard? Something we moved away from after WW2? What happens if gold ceases to be legal tender? How does this impact the move to a digital currency? Right now I believe that gold is performing the role of a store of value. Interesting moves . I think.
I do not believe so. I think we are moving towards a number of reserve currencies. There are no new findings of gold and the dollar as the dominant reserve currency will weaken, as US economic dominance weakens. We are living in interesting times. Russia and Iran are now trading largely outside the dollar.
Cryptocurrencies have no long-term future. It is a digital South Sea bubble. Instead of tulips, we have mickey mouse money.
@ John 2
If you read the contract it speaks to having a ” disaster release clause in it”. Who will determine what a disaster is CERO? To agree to that in a contract that is so broadly worded would be madness.
Puerto Rico had a massive hurricane in the middle of their debt restructuring did it stop them from settling on their debt, No.
Read the dam contract conditions before you make foolish comments based on party loyalty.
Let me ask you a question based solely on economics? If you had a choice between waiting years to get back 66 cents on the dollar or take a cash offer today at 50 cents on the dollar from a vulture, would you not consider the 50 cents?
Cryptocurrencies have no long-term future
Actually I am opposed to the Blogmaster for plugging BITT but digital ‘money’ is where this is all heading. Not in its current form but a more robust, slightly more sophisticated and widely acceptable/ accepted version.
The world has to reach the stage where every single financial transaction can be logged, monitored and recorded in real time. We are not far from that stage now. Widely used digital currency is the ONLY way to achieve this.
Doubt the Dullard?
When and where has the blogmaster plugged BITT? By BITT you mean bitcoin or Bitt.com. Asking for a friend.
Now that we have shown the flaws in option 1 let’s look at option 2.
A 25 year bond
Another natural disaster clause
A 15 year period exempt from principal payment
A 3.5 rate of interest.
A complete write off of the PDI AND ALL ACCRUED INTEREST.
ok in bajan terms now .
Wunna ain t getting a cent in principal for the first 15 years, even though it’s a 25 year bond. Wunna will only get 3.5% interest fixed over the same period regardless of what the market rate is over the said period . Oh and them old charges that we ain t pay while WO was getting $85000 A month, wunna forget them too!
Finally if we get a storm or ” disaster ” as designated by us all bets are off.
That is what 13 months at $85000 A month has come up with and presented to the foreign creditors. Really now put yourself in the foreign creditor shoes and tell me what your reply would be?
Any that want to discuss it don’t come back with no party loyalty or rally around the flag crap either, bring sound financial reason or don’t choke up David blog!
@Tron touched on the point tangentially in one of his more sober posts.
But it appears that Bdos will endure a grim period of austerity and at the end of the day will have little to show for it. Besides some IMF box ticking, there wont be any major changes in behaviour on the ground.
No increased productivity/ efficiency.
No diversification away from selling time in the beaches and sun.
NO shrinking the public sector.
NO culture of business startups.
NO improvements in the ease in doing business, etc.
@ John A
Why do you bother.
DO these terms seem reasonable to you. The Wh.ite Hoax crew and fake prof.essor probably mistook the foreigners for Bajan Brass Bowls.
In times of crisis there are always lots of innovative answers. But, as we return to normality, we will also return to order and discipline. Cryptocurrencies were created to bypass central banks in 2008.
No disciplined society will allow this to happen. Will you allow Zuckerberg to control all the data about your life, including your spending habits?
When and where has the blogmaster plugged BITT? By BITT you mean bitcoin or Bitt.com. Asking for a friend.
The Adams and Abel run outfit. Ring any bells?
You need to reread with comprehension.
-Abel + Abed
PRECISELY who will determine what a disaster is? Is it CERO?
One will agree that if that clause is agreed on in the negotiations the two team will decide on that who.
In the mean time you are in here appointing urself and deciding it can be heavy rainfall. Foolishness.
Maybe you should consult a dictionary for the words disaster and event.
I have no loyality to any party, I am a member of none and I voted for none. For the last election I morally supported the
BLP because the DLP wasn’t cutting it and the third parties IMO are not ready yet.
I discovered BU in my attempt to follow Solution Barbados but got turned off along the way.
Keep on with your ignorance!
Why should I read a damn contract to correct you the a rain event is not a disaster?
You sir is who making the foolish comments and giving foolish instructions.
@WilliamSkinner . I repeat. It’s the first time in Jamaica’s independent history that it has tick so many boxes from a macroeconomy perspective. Jamaica experience high economic growth in the 50’s and 60’s… never to be duplicated again. Even Lee Kwan Hue was so impressed with jamaica economic dynamism that he visited the island in the very early 70s. However, from the mid-seventies to 2013 the macroeconomy metrics were poor on all fronts. Eg. regular annual double digit inflation, unemployment rate of over 12%, high interest rate, constant depreciation of the currency, high fiscal deficit and debt ratio.
A world bank study some years ago showed that jamaica had one of, if not, the slowest economic growth rate in the world of since 1974.
What is positive about the Jamaica experience in recent months fueling the reported success the government has achieved is bringing all stakeholders together to achieve agreed goals.
I know you are correct to ignore some, but it annoys me when some try to mislead the public out of yardfowlism. This is by far the most serious issue we face and when I read the total crap excuses and reasoning for lack of a better word some apply, I can’t help but wonder where our tax dollars went in free education.
I don’t expect all to be interested in this topic, but I really wish the deflectors would just take a break and let us discuss our reality and share facts and data with people as opposed to propaganda dressed up as such.
I know you will tell me ignore them but Lord it ain’t easy sometimes. Lol
I will however try to again use that approach.
But, as we return to normality
What is normal? The old normal has now become abnormal.
No disciplined society will allow this to happen
What is a central bank but a collection of private interests controlling certain aspects of a state’s macro-economy.
Will you allow Zuckerberg to control all the data about your life, including your spending habits?
Unless you currently take active measures to stop it, Google already has enough information about you to create a very accurate profile of you. Your interests, your spending habits, travels, what you read, political persuasion, religion, etc.
Would you feel safe signing a contract for repayment with a ” disaster clause in it.?”
Simple yes or no answer is all that is required.
All storms are not considered ” a disaster event” just letting you know since you seems to be ignorant to what is a disaster event.
Don’t try diverting me to no damn contract in any attempt to hide your ignorance or your trying to score political points based on party loyalty
If BLP in powuh – YES. If DLP – NO
There is a universal definition for what is a national disaster.
Keep slavishly and FOOLISHLY following all these crypto scams and the vulnerable islands will continue to end up where they have for decades following SCAMS THE USUAL CRIMINALS CONTINUE TO INVENT….in the last week alone i have seen at least 6 new ones…all meant to keep the vulnerable in poverty.
“Facebook announces Libra cryptocurrency: All you need to know
@JoshConstine / 10 hours ago
Facebook has finally revealed the details of its cryptocurrency, Libra, which will let you buy things or send money to people with nearly zero fees. You’ll pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger and its own app. Today Facebook released its white paper explaining Libra and its testnet for working out the kinks of its blockchain system before a public launch in the first half of 2020.
Facebook won’t fully control Libra, but instead get just a single vote in its governance like other founding members of the Libra Association, including Visa, Uber and Andreessen Horowitz, which have invested at least $10 million each into the project’s operations. The association will promote the open-sourced Libra Blockchain and developer platform with its own Move programming language, plus sign up businesses to accept Libra for payment and even give customers discounts or rewards.”
Lol Lord have mercy don’t tell me you growing feathers now too! You know if you ask too many questions you is a D though?
Anyhow I following you advice!
So Google has lots of data on us already (by the way that is not universally true) does that mean you see no problem in having them control global finance?
Central banks act in the interest of the state, Facebook is a listed firm perversely dominated by one man.
Agreed everyone situation is different. But JOHN A seem to think because he can see it this or that way then that how it must be.
If u SEEMS not to be in his camp you are either a political yardfowl or free education was lost on you. He and his likes are the only ones than can think freely.
You too missing my point. It is for both parties to agree on the inclusion of this clause such that it exempts the debt holder from their liability to pay. If the lender says sorry I am not willing to agree on that clause, you could bring 20 English professors to the table it will make no difference.
In the case of Puerto Rico which we like to refer to, they were hit with a devastating hurricane in the middle of their process, yet it did not stop the negotiations or final settlement.
We have already put ourselves in a negative light by defaulting I think that ” disaster clause ” to the foreign creditor, does little to inspire confidence in light of our situation. In my view it should be removed from the contracts completely.
It just opens all kind of doubts as to what one may consider a disaster and at what point legally does extreme damage say from weather become a disaster.
In other words is it to be based on a dollar value in damage, the period of disruption of services for example or what other formula?
Just one more clause that will make the creditors uncomfortable that’s all it is.
No point missed. Unless you are privy to the wedge issues at the negotiating table it is a guessing game.
The Indian-American community has grown by 38 per cent between 2010 and 2017, according to SAALT. About 250000 Indians overstayed their visas in 2016, according to the survey. If the community continues to grow at this rate this may pose another social problems for the US in future.
David this whole thing seems to be a guessing game as we are being asked to blindly buy into something that little has been shared with us on and when we ask questions we are told ” we can’t discuss that as we are in discussions.”
Yet the creditors seem more willing to share information with the foreign press where we then in turn get our information from?
You don’t as a bajan see something wrong in principle with that?
These are hard negotiations taking place, the creditors are not sharing information out of any obligation to be transparent. It is to shape the narrative around the issue.
You are only saying that because of your political loyality.
That guy don’t want to haer anything that is not aligned to his thinking
@ John 2
Quite the contrary I am willing to listen to any point as long as it is grounded in financially sound reasoning and fact. I don’t care about party or any other triviality. David and I have discussed many issues using this criteria, it is only when it sways from those guidelines I remove myself from the discussion. I also have always tried to look at all situations from both sides and this case is not different. You can’t arrive at a fair overview unless you put yourself in both people’s shoes and are willing to recognise shortfalls where they exist.
Yo repeat the point, unless we are made privy to the agenda points between WO and creditors we are speculating. Further, two parties can agree to any mutually acceptable agreement. It is obviously a tough negotiation and whether we agree with the decision to SD one must admire the government for fighting for the best deal. Of course a proud people that we are would want to have avoided a SD. Like you patriotic Bajans want the deal closed and to move on.
You are aware Jamaica and Barbados became voluntary members of the IMF for a reason?
fortyacresandamule June 18, 2019 11:59 AM
@David. The reason Jamaica has become the poster child of IMF austerity measures is because it is the first time in Jamaica’s history the country has managed to achieve macroeconomic stabilty. To be fair, this is a massive accomplishment by the government of Jamaica given where they are coming from.
@WilliamSkinner . I repeat. It’s the first time in Jamaica’s independent history that it has tick so many boxes from a macroeconomy perspective. Jamaica experience high economic growth in the 50’s and 60’s… never to be duplicated again. Even Lee Kwan Hue was so impressed ………
You first stated it was the first time in Jamaica’s history
Then you came back and said : its the first time in Jamaicas “independent” history. Jamaica became independent in August 1962.
So which is it ? is it in Jamaica’s history or “independent ” history.
Like I said your submission was patently inaccurate and littered with contradictions And furthermore how can you magically repeat
something you never said in the first place.
You will soon learn that the IMF will declare the operation successful while the hymns are being sung at the funeral. The same fate awaits our country.
To a point I agree with you but there is a lack of general information being shared with us by our government, let me explain.
In today’s press there was an outline of the offers being made in detail by government to the foreign creditors agreed?
Yet there was no article published or statement made by our government as to the offer that the creditors made to us , why was that?
All that we were told is ” their offer would of meant we would of reached our goal 12 months later.”
How could that possible be good enough to us when you only are willing to share your offer but not theirs? Don’t come with no excuse about negotiations ongoing either, cause you were quite willing to share your offer for all to see, so why not publish theirs too?
No worry it will probably show up on Bloomberg Financial soon and I will read it there.
Expect the creditors to respond. The Barbados government obviously has decided to play the game.
All I did was point out several inaccuracies regarding Jamaica. It’s futile trying to convince me that the IMF policies work. At best there are nothing but new paint on old wood.
You and others will soon hear that they are working here as well. In the meantime people bring tossed out of work; the rich being given excessive tax breaks; water bills up in the air and cost of living rising as well. Have a meeting with all those who have been retrenched. Go and tell them how well the policies working. While you are at it try to find some money that you owe because of default. Almost forgot the increase in bus fares. Talking about macro this and micro that, never put food on anybody’s table.
No where in the world where the IMF went ever recovered. All that happened was that trade unions were destroyed; workers at the bottom were retrenched and the rich got richer.
@ those that are pushing the Puerto Rico factor.
May I remind you that Puerto Rico is not a sovereign state/ country.
In the event of a natural disaster the federal government of the USA will provide aid/assistance (of all kinds including financial).
Barbados is a sovereign country an has to “brek fuh itself” financially in the aftermath of a “disaster event”.
IMO it is very wise of the Barbados government to try “to cover our asses” in the possibility of such an event occurring here.
Those that are hitting out at this clause and trying to tie it to Puerto Rico is totally misguided.
Raise your had John A !
The point is we turn to the IMF because of an inability to manage our affairs. For Barbados it is all about defending the peg at any cost.
Barbados when to the IMF and recovered.
We are to blame for being back there not them (IMF).
@ John A June 18, 2019 4:47 PM
“Yet there was no article published or statement made by our government as to the offer that the creditors made to us , why was that?”
What “intelligent” Bajans also ought to be demanding from their pretend transparency-loving government are the purposes for which these loans were taken out.
Were these foreign loans taken out to build infrastructural capacity to support socio-economic development or were they taken out to shore up the balance of payments in order for the lasciviously materialistic Bajans to go on their annual Xmas shopping jaunts especially the OSA years of make-beleive manna and false years of plenty?
Why should these former foreign sugar-daddies be easy on Bim while Bajans continue to sleep with the devil of conspicuous consumption using the pseudo Viagra of materialism on hire purchase from the IMF loan shark?
Good point yes after all we were promised transparency.
@ John A
Barbados borrowed money to survive and indulge in the same poor economic policies of catering to the wealthy and ignoring the rising poverty .
In other words there was no recovery. We simply borrowed money and paid it back.
Today it’s the same process only at a higher grade. This time the Default is included.
So I ask: Recovery from what?
Operation successful; patient on way to the morgue.
@ John A
You have tried. You have stated your position. I believe your views have made a difference. Just bear in mind you are not here to win an argument. This is a zero sum game.
@ Miller at 5:17 PM
You are something else and a piece ‘pon top.
I will try as you say to walk away from futile discussions. Maybe I better start using your ZR approach.lol
Yes when you look at it from the outside it looks that way. We borrow to pay off debts then we run up New debts.
That can only happen if after we pay off our debts we continue to spend more than we make going forward. The question is who will step in and say ” look this is our income and as a result from today we will only sell that.”
@WilliamSkinner. Stop splitting hairs. You know what I meant, but instead you choose to dwell on triviality. If I was alluding to the whole economic history of Jamaica I would have to start from spanish colonization (1505) and that would make no sense. It is only after independence that credible, and robust macroeconomic data become available.
Sorry spend not sell
We have only ourselves to blame.
We differ on what I am thinking your meaning of recovering from the IMF/ its policies.
We cannot blame our economic conditions on the IMF.
My take of what you had said was that any country who goes to the IMF does not recover ( because of the IMF policies).
But what you are saying is that they still continue with THEIR failed policies that’s why they are not recovering.
Therefore I stand by my statement as far as Barbados is concerned:
Blame US for not recovering, not the IMF.
Yes you are so correct on that. Thing is though who will draw the line in the sand after all this is over and say from now on we live by our income?
For example will government say ok for the year coming we are allocating 10 million to the importation of cars no more?
It’s just an an example above but this is the type of approach that would have to be adopted. I don’t know if any government here is ready to do that yet..
Would you say the USA recovered?
Will the real leaders stand up?
Didn’t the government say it is not borrowing for the next four years?
You are not getting what you , a complete stop, but……..
Getting back to your argument/ scenario
If the creditor “catspraddle” the government and the government is unable to borrow, would this force us to live off the FX we make?
It is going to be tough for Ms Motley or any PM going forward to come and say these are the new rules. We have become so accustom of finding all imported goods on demand that it’s now entertaining. Here is why I say entertaining. I was in a supermarket this weekend and in the frozen goods section would you believe I saw Stoufers Macaroni and Cheese. That’s right no joke macaroni pie made in the USA and imported into Barbados for sale. I mean could God we are the macaroni pie capital of the Caribbean, wunna want we now buy the US one too? Lol
Not hitting at you!
Its what you call an open economy.
Its the same way you can go to the USA and find Shirley biscuits in Walmart when they have so many different types made there.
And all tourist don’t stay in hotels and will buy what they use to.
And how can we get away from something like that?
Macaroni, cheese and most ingredients are all imported.
It just the bajan labour that is the difference
I understood exactly what you meant. You are now attempting to cover up a hugely inaccurate statement. I don’t know where you do your research but there is data preceding the independence of all Caribbean countries. Saying that you would have to go back to 1500 is nonsense. You obviously did not expect to be challenged on an inaccurate statement.
@ John A
You asked me if the USA recovered . I ask from what. Kindly elucidate.
@ John 2
My position is not whether to blame the IMF. Far from- I’m simply saying that the IMF policies are not the best for countries such as ours.
I’m also completely opposed to those who are going about the place spreading propaganda that we need the IMF.
Many of our problems stem from failure to develop economic policies that will make us far more developed than we are now. Our whole tourist industries is a direct drain on our economy. In other words we spend back millions earned in tourism because of how we developed it.
The same goes for the construction and agriculture industries. Then it extends to the manufacturing industry.
The IMF cannot and will not solve those problems. This talk about macro gains is pure pie in the sky hopefulness.
Do you know if we were keeping 80% of the money made from tourism, we could never face balance of payments problems?
Do you know that if the agriculture industry was properly developed and we reduced our food import bill by 60 % we would never go broke?
IMF is not even a good medicine farless a cure !
Which Walmart in the USA sell shirley biscuits?
@ Trust No One
Shirley biscuits are sold at Walmart. This I know for a fact.
@David. Here are some of the positive results coming out of Jamaica since their second debt exchange and there EFF IMF programme which began in 2013:
(1). Hugh reduction in debt to GDP ratio. From 150% to 95% today. First time debt reduction falls below 100% since the mid-1990s.
(2). Balance budget and budget surpluses for the last two fiscal year.
(3). The lowest unemployment rate(8%) since independence
(4). Adequate non-borrowed foreign reserve.
(5). Low inflation and benchmark rate.
(6) Establishment of an independent oversight committee to monitor government targets set by the IMF.
Why do we expect a person who is part of the problem to solve the problem? Why don’t you all accept that the only difference today is style. The substance and approach are the same.
Just pay attention to the actual message and not the style in which it is presented.
This is our third trip to the IMF and this time it is accompanied by Debt Default. So there you have it: multiple downgrades; three visits to the IMF and Default.
How much clearer do you all want to see it ?
Thrust No One
I wouldn’t make that statement if I did not see it for myself!
If ya can get Banks malts on Flatbush for 99c and that was from back in the 90s, ya can get Shirley Biscuits in Walmart, am sure for even less.
@ David and company Done be fooled. Read for yourself
2018 marks 41 years of IMF ‘rescue’ of Jamaica
BY SHALMAN SCOTT
Sunday, May 13, 2018 75 Comments
IN 1976 the Bank of Jamaica (BOJ) ran entirely out of foreign exchange, leaving the Net International Reserves (NIR) balance at zero.
There was no foreign exchange to buy oil to provide the country with electricity and gasoline — key sources of energy. No money to buy medicine and other vital supplies for the health sector, to purchase basic food supplies — most of which are imported, requiring foreign exchange to purchase.
The country, through the convergence of various dynamics including the destabilisation of the Jamaican economy by the United States of America (a fact that the USA has acknowledged publicly), was brought to its knees. Four years later in 1980, the worsening situation gave birth to the song Everything Crash — sung by musical group The Ethiopians — which summed up most succinctly the simmering state of negative economic, political and social affair existing in the country during those heedless days.
Desperate solutions were quickly needed to put a brake on the deteriorating condition of our country’s economy, and especially with it being an erupting and disrupting inharmonious social order catalysed by the clashes — verbally and physically — of the two major political parties, the JLP (Jamaica Labour Party) and PNP (People’s National Party).
This is when principal advocate for a New International Economic Order Michael Manley, an avowed disciple of anti-imperialist and anti neo-liberal politics, as Prime Minister, made his volte face (about face) and went hat in hand to the IMF for ‘rescue’ in 1977. That ‘rescue’ is now 41 years old.
In 1985, under Hugh Hart as Minister of Mining and Energy, the Bank of Jamaica again ran out of foreign exchange completely. The captain of a crude oil ship that arrived in the Montego Bay Harbour only agreed, based on previous experiences, to unload the shipment of crude oil after he received payment for same. Private citizens in Montego Bay and surrounding areas were rallied by Hugh Hart on behalf of the then Jamaica Labour Party Government to make cash contributions to this particular oil bill. The monies collected were transported to Kingston by three policemen from the motorcycle division of the Jamaica Constabulary Force, and taken to the Bank of Jamaica where it was lodged and a cheque drawn. The motorcycle policemen returned to MoBay and paid the ship’s captain, who unloaded the oil and left Jamaica’s shores immediately.
This was a time when Edward Seaga was prime minister of the country. This article is intended, as far as possible, to take a dispassionate and objective scrutiny of the outcome of the relationship with the IMF and, by extension, other multilateral agencies over the period of this relationship.
On April 1, 2017, Jamaica would have begun its 15th medium-term agreement with the IMF. Over this 41-year period Jamaica failed 11 of the 15 IMF agreements and was assisted to pass two of the remaining four by way of debt forgiveness and waivers etc. Without that help, the country would have failed 13 out of 15 IMF agreements in 41 years. This fact imports the urgent and timely question — whose fault is it? The IMF and its conditionalities, or it is the fault of the country of Jamaica?
Read a statement from the IMF published by the very respectable British newspaper The Guardian quite recently regarding countries, like Jamaica, within the Caribbean that are experiencing similar difficulties with stabilising, balancing and growing their economies despite heavy international borrowings: “Since growth in the current environment is virtually non-existent, significant fiscal consolidation (tax increase and budget cuts) is inevitable but may not be enough to bring down such high debt levels….”
Let’s translate this. What the IMF is acknowledging is that countries like Jamaica need to make deep budgetary cuts, but because there is and will be no growth (note), the debt will remain. As the debt increases, more of each dollar earned by the country goes towards debt repayment, leaving less to finance a budget to run the country. In 2011/2012, 80 cents out of every dollar earned by the country was spent to pay back loans and debt service charges, leaving only 20 cents to run the country. Over 40 years, Jamaica repaid $19.8 billion, than it has been lent (18.5 billion) yet still owes $7.8 billion as a result of huge interest payments.
Government foreign debt payments ($1.2 billion) are double the amount spent on education and health combined. Throughout the over 40-year life of IMF agreements, that preceding pattern remained predominant, starting with the oil price shocks of the 1970s and 80s which pushed interest rates up and which in turn caused the cost of debt servicing to rise. Sixteen per cent of exports in 1977 paid Jamaica’s external debt, but by 1986 the figure rose to 35 per cent of export earnings.
In 1990, 97 per cent of students completed primary school. Now it is 73 per cent. In the same period, 59 mothers died in childbirth for every 100,000 births. Now it is 110.
In all this, successive Governments can point to some positives accomplishments undertaken by each major political party in power, but there exists and continues to persist, the waste of public resources, corruption, greed, dishonesty and a constant decline of the marginal productivity of labour throughout the society. In this, no grouping within the society can successfully claim innocence or lack of knowledge. So, after, all it is not just the fault of IMF conditionalities that has plunged the Jamaican economy into the doldrums in which we are now borrowing loans in order to pay previous outstanding loans.
When a person gets to that stage in life, when one begins to “borrow from Peter to pay Paul”, that is most definitely not a good nor comfortable place for such an individual to be. This is where, inspite of the heavy doses of public relations stunts and gimmickry, and the marinating by ‘slick’ politicians of the citizens’ creative imagination through carefully crafted propaganda, Jamaica has arrived at for quite sometime now.
The alarm raised by the political drumbeats about a two per cent growth in the third quarter of 2016 did not postpone the introduction of the need for the supplementary estimates to be tabled to provide additional money to run the country until March 31, 2017. Budget cuts and increased taxes (fiscal consolidation) has been at the heart of the IMF ‘rescue’ mission for the last 40 years.
Jamaica is now among the highest indebted countries in the world. Debt, deficit and decline have continued throughout the period of the IMF/Jamaica relationship, and so it is not caused by wickedness on the part of the present JLP Government. They will have to take some very unpopular and painful decisions going forward, but there are no other options.
This forces both political parties in Government to recite the same mantra and talk the same language to the Jamaican people as to why neither Government in office can perform to the satisfaction of the citizenry. Here is one thing on which both political parties concur: Due to fiscal constraints we are unable…”
In the absence of growth, debt write-off of the countries in the Caribbean Basin led by the IMF is the only remedy to our collective monetary, fiscal and growth problems.
The IMF ‘Rescue’ is a rescue for Jamaica’s creditors, including IMF sister agencies The World Bank, Inter-American Development Bank, Organization for International Economic Cooperation, and Development et al… spelling more suffering for the Jamaican people. The newly appointed Jamaica Minister of Finance, Nigel Clarke has begun to give out some interesting and powerful sounds about the fiscal and monetary management of Jamaica’s economy going forward. Minister Clarke must know that when Europe entered its fourth year of debt and austerity, Jamaica had entered its fourth decade!!! This further underlines the urgency of our economic situation.
This is unsustainable if there is no growth, says the IMF which arranged the same programme. And now we know the photo op at Jamaica House — under the Jamaica Coat of Arms — comprising Prime Minister Andrew Holness, Michael Lee-Chin and Aubyn Hill, each with hands crossed and collectively displaying 27 outstretched fingers depicting the economic growth trajectory of “5 in 4” prophesised by them … just did not happen!
Political commentator and historian Shalman Scott served as the first mayor of the city of Montego Bay
@William Skinner. You are still clutching at straw. Show me where you can get CREDIBLE and ROBUST macro economic data for any caribbean countries even in 1940s when most didn’t even have a central statistic office. Wheel and come again.
In a society,there will be persons, individual and corporate , who will spend more than they earn and those who will consume less than they earn. To keep the economy in existence what is earned must be spent. Finance is the vehicle through which the economy is kept in equilibrium.
The international economy works in the same manner countries that export surplus production lend the surplus income to their trading partners. They ,in turn, use the funds to pay back the net exporters. So Britain’s trade deficit is paid by Germany’s surplus. And USA deficit is paid for by the surpluses of China and their allies in the Middle East.
This notion of Barbados living above its means is ridiculous.
@Vincent Codrington June 18, 2019 7:38 PM
“This notion of Barbados living above its means is ridiculous.”
So why not pay the creditors what is their due?
Why trim the financial hair of the local bondholders without their permission?
Only people who are broke behave in such fashion.
The overseas creditors are not like the Bajan coolie man (Indian itinerant trader) from whom you can hide and defer your debts.
Barbados was heading down the same road as CLICO as a result of poor financial management.
EWB put it succinctly when he said that Bajans have champagne taste but mauby pockets.
Fortunately, the IMF has taken control.
@ Miller at 9:30 PM yesterday
Do you recall the context in which EWB made that famous statement? Context determines meaning and he did not use it to shore up your narrative. EWB was an intelligent and articulate man.
@ William Skinner at 6 :46 PM
Go to the top of the class. We do not benefit as much from tourism because of the way it is structured. And we continue to follow that ineffective model. Barbados is the net loser.
Wuhloss…word is that the HYATT SCAM with tiefing, evil Maloney was FIRST conceptualized under BLP government many, many years ago… both repulsive governments too love to TIEF EACH OTHER’S SCAM …to work against the taxpayer’s money and the pension fund money…..
the scam was bound to come out….evil just CANNOT HIDE FOREVER..
@ Vincent Codrington June 19, 2019 8:56 AM
So what is your ‘understanding of that prescient statement made by the “Father of Bajan independence”?
Isn’t that the exact bind Bajans now find themselves; but still wanting to live the‘Big Life’ and can only afford it by borrowing other people’s money including the loan-shark IMF?
What about EWB’s prophetic statement that ‘if poor people want justice they should stay away from Coleridge Street’.
Aren’t both statement a true reflection of what is facing Barbados today?
A broken economy and a broken-down judicial system?
Mirror image VC, mirror image determines context! What’s the Bajan mirror showing today? A big ‘B’ for bullshit that looks like a bigger ‘D’ for Devaluation?
@ Miller at 4 :24 PM
I am not going to disagree with you over the state of the Judicial System. But without borrowing and lending ,the Capitalist Economic system would implode and take Barbados with it. Small states by definition are dependent on the international economy .
Wuhloss…WORD around is the Chinese got kicked out of the Sam Lord’s Castle Ramada project…someone said ASK MIA…
strange things are happening.