Barbados Pushing Back on External Creditors

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.

https://www.nasdaq.com/article/creditors-prepare-to-push-back-on-barbados-debt-proposal-20190612-00956

 

221 comments

  • How will we get back there?

    That would mean we also have learnt nothing from our experiences now.

    Liked by 1 person

  • On the plus side the percentage of foreign debt as a percentage of total debt is not overwhelming.

    On the negative side unlike the local creditors who we were able to dictate to, these guys will not be treated that way. We also got to realise we will have to go back to the foreign creditors in the medium term whether we like it or not. Even if we avoid those we now owe and try going to others,the results will be the same if we don’t be careful.

    Liked by 1 person

  • fortyacresandamule

    @David. Not really. I am hearing about low reserve for ages now. You have BU commentors from as far back as 2009 forecasting the eventual collapse of the fixed exchange regime on the basis of our low reseve to no avail. In theory, Barbados currency should have at least selectivley devalue given the dire economic metrics( eg. low reseve, high current account deficit, money printing etc).

    Hurricne season. Barbados is outside of the core hurricane belt, unlike the more northernly caribbean Islands.

    If the external debt was say 40% of total debt and we had a floating exchange regime I would gladly welcome the default. But this is not the case.

    Liked by 1 person

  • @fortyacresandamule

    Government of Barbados proposes cuts to bondholders

    Sunday, June 16, 2019

    In its latest Creditor’s Update, the Government of Barbados (GoB) indicated that is was going to propose a second round of haircut proposals to bondholders.

    Barbados is going to offer holders of its 7.25% Notes due 2021, 7.0% Notes due 2022, 6.625% Notes due 2035 (collectively, the “Eurobonds”), and the Credit Suisse 2018 and 2019 loans the option to exchange their existing instruments either into new Amortising Step-Up Notes due 2033 (issued at a 33.3% discount to face value), or for new 3.25% Amortising Notes due 2044 (issued at par).

    The GoB led by Prime Minister Mia Mottley said it is continuing consultation with restructuring its 12 billion-dollar US dollar-denominated commercial debt under reforms being implemented under the current four-year Extended Fund Facility (EFF) with the International Monetary Fund (IMF).

    The GoB has set a target of a 60% debt-to-GDP by FY2033/34 target, a key anchor for the IMF-supported programme under the EFF, with an intermediate target of 80% by FY2027/28.

    Weighing the impact of the news, chief executive officer of Sterling Asset Management, Charles Ross, who had encouraged investors to exit Barbados from as far back as 2012, says that the development highlights the contrasting performance of Jamaica’s economy and those of Barbados and Trinidad.

    Jamaica is now being viewed as a ‘turnaround story’ economically, “given the overall high levels of confidence, political stability and Jamaican dollar liquidity”, he said.

    Speaking ahead of Sterling’s investor briefing next week, Ross said that Jamaica’s economy was characterised by macroeconomic stability, falling debt-to-GDP ratios and fiscal surpluses, in marked contrast to its Caribbean neighbours, Barbados and Trinidad.

    “Barbados has gone from an investment grade rated territory to one in default on its international debt; Trinidad was just having difficulty refinancing the debt of its state-owned oil company. Jamaica in contrast has raised financing at very low yields.”

    He added that the economies of the two CARICOM neighbours were suffering “from a myriad of problems, among them is an overvalued exchange rate and a reluctance to let the free market do its work. Both Barbados and Trinidad are committed to a fixed exchange rate. It is possible that this has been a large contributor to the current challenges they are experiencing. A fixed exchange rate has made their exports globally uncompetitive. The flexible exchange rate regime in Jamaica is critical to our ability to facilitate export led growth”.

    He viewed Jamaica’s recent attempts at reducing interference in the FX market as a way of avoiding the dilemma facing Trinidad and Barbados.


    Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at http://bit.ly/epaperlive

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  • William Skinner

    I won’t be too impressed with any report touting Jamaica as a “turn around “ success story at this time. The wounds that the IMF has inflicted on the country are perhaps never going to heal. A similar outcome awaits our country.
    However, I suspect that there is very strong residential construction going on in Jamaica. Many Jamaicans are remitting millions of USD to build mansions because of the exchange rate. This is not our case.
    We may not want to admit it but eventually it would be found that , in our case, collective mismanagement, led to panic.
    One of the critical areas that we should review is the failure of Arthur who when the economy was said to be buoyant for several years, never demonstrated any tenacity in restructuring the economy.
    This was then followed by Sinckler’s failed policies.
    What we have now apart from the IMF and Default is too much blundering and apparently i’ll conceived decision making. The very latest is the fiasco regarding the twenty four hour service at some polyclinics. Prior to that we had tremendous confusion with the laying off process and pure stupidity regarding the transport service.
    While any Barbadian would want the government to succeed, we cannot just sit and accept events without critical analysis.
    There is a reason why Arthur’s legacy is being quickly forgotten. Compare that to Tom Adams’ relatively brief stay and at the wicket and we see why his innings is more remembered.
    History may very well condemn both Sinckler and Arthur.
    I suspect they will have others joining them just now.

    Liked by 1 person

  • Piece the Legend

    Are you for real with this title?

    Who you see as going to be the winner in this “push back” contest

    Just wait till the Emergency Funding run out!

    AND WHEN THE MUDDER COUNT EXCEEDS 50 watch how many Bajan Yankees and Canabajans and mad ass britishers GOING BE COMING HOME TO 2020

    Liked by 1 person

  • fortyacresandamule

    Error. The total external debt is US$$ 1.2 billion and not us$12 billion. Mr Ross analysis about Jamaica economy is full of half-truths. Yes, Jamaica have managed to achieved marco-economic stability since the IMF 2013 programme was implemented. However, it comes at a steep price. Jamaica’s primary surplus is the highest in the world( 7% of gdp) not even debt-ridden Greece come close.

    Emperical evidence has shown that the flexible exchange rate regime does very little in the growth of the Jamaica economy. It only benefits the tourism sector by maintaining a low wage environment.

    With all the macro-stability happening in Jamaica, the country still struggle to even grow at 2% annually and the exchange rate movement is volatile. As a matter of fact, Jamaica’s growth rate since its independence, is akin to a country at war, less than 1% annually.

    Liked by 1 person

  • @fortyacres

    Why is Jamaica still able to attract such positive reviews from market analysts?

    Like

  • NorthernObserver

    @Blogmaster
    Sterling is a Jamaican company with some interesting connections. They don’t count.

    Liked by 1 person

  • @NO

    We have had Oppenheimer and a few others?

    Like

  • @ John A (7.29)

    You are right. As I have said President Mottley does not do details. Waving her hands about, she talked about the need to grow the population, then we had the announcement of 400 Ghanaian nurses; she talked about a hotel corridor running from Hastings to Black Rock, then we heard of the Hyatt expansion, and turning the old Hastings Police station in to a hotel, no more details; she talked about expanding the airport, then we were told of a so-called concession, no more details; and, of course, we heard about BERT, along with mass sackings and head line announcements.
    The president talks about moral and ethical politics, but what exactly does she mean: does that include changing the constitution as an emergency to accommodate childhood friends? Does that mean going to Canada and promoting a private company headed by one of these friends? Does it include having so-called economic consultants some of whom (at least one) were close friends prior to government? Or does she mean Bajan ethics? When are we going to have serious discussions in parliament about public policy? When are young ministers going to walk out of this Cabinet?
    She gets away with it because our print media is badly in need of proper training. That should be a priority. And what public conversation we have is narrated in party political terms.
    Barbados is a failed state.

    Liked by 1 person

  • @ Hal

    The truth is the print media in terms of finding and printing data is useless. Were it not for the foreign media we would know little to nothing on some matters. The society on a whole though doesn’t seem to care and as long as the government plays to this every body happy.

    The press now and it’s followers will soon be led like sheep to focus on Cropover, so that will distract them at least to the end of August. If you read some of the responses on this blog you can see how illiterate many are to the crisis at our door step. As for the so called opposition, I put them in the same boat as the media. Were they of any use they would of held on to this issue like a dog with a bone, then again I am assuming they too understand the crisis we are in with it.

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  • @ Hal

    You also realise that at no time has the pressed published the offers made from the foreign creditors in detail. All they have stated is that ” to accept their offer would mean government would meet the IMF target a year late.”

    Do you honestly think the creditors are concerned with targets set between a defaulting government and the IMF? They are looking for closure on the matter not pandering to the IMF demands.

    Liked by 1 person

  • Vincent Codrington

    @ Fortyacres
    @Hal
    @ John A

    Good submissions. Thanks for hanging in there and rescuing this debate from mediocrity. From time to time we need to do a reality check rather than accept the outpourings of self appointed experts.

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  • @ Vincent.

    Thanks, I have read both options offered to the creditors. In one they are offered discount bonds at 66% of original value with a 2 year grace giving them 3.5% for 2 years and 7.5 % over the balance. So you asking them to lose 33% there.

    Option 2 you want to give them new bonds of 25 years but you want a 15 year grace period on principal! Oh and you want ALL the interest written off too. So they losing 7% interest over 25 years there.

    Then you put In a ” disaster clause” too as a back door on the agreement. So who will decide what a “disaster” is CERO?

    So why wunna don’t now publish in detail the counter offer by the creditors for us to see too? Or you feel we too ignorant to make our own judgement on what separates us.

    Vincent you would recommend a client of yours to take either of the 2 offers with an unspecified “disaster clause, that could be anything from a heavy rain to a hurricane or death of a politician?

    Liked by 1 person

  • Vincent Codrington

    @ David at 8 : 43 PM of 17 June

    Assuming that is the official explanation of GoB, they have no foundation in economic analysis.

    We have had a hurricane season every year from the date that Barbados folded up out of the Caribbean sea. And we have always made sensible preparations for them. They are rare occurrences. This is an uncertainty. The risk cannot easily be calculated for uncertainties. You prepare for them.

    We have from time to time had reserves much lower than these. Adequate foreign reserve is a flow not a stock. The important question is have we been meeting our foreign payments if and when they are due.
    Heavy loan repayment is what the DLP Admin had to face in 2008. Nothing new or surprising about these.

    No these are not good economic reasons for Sovereign Default. It was a bad mistake. Especially if you plan to depend on borrowing to tide the finances over short falls of revenue below expenditure in the future. Which sane creditor lends to a country that defaults. Trust is very important in finance. Do not undermine it.

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  • In the middle of the Puerto Rico debt restructuring they were hit by a massive hurricane, are we trying to say that should of given them the right to walk away from contracts they entered into? No it didn’t nor would the creditors there agreed to any attempt by them to do so.

    Left out the yardfowlism and party loyalty and think for yourselves here for a change. Ask yourself as a creditor what would you accept?

    Liked by 1 person

  • Vincent you like you was tapping your key board the same time I was tapping mine. Lol

    Liked by 1 person

  • @ Vincent

    Go to the top of the economic class. The hocus pocus abut foreign reserves is irritating. 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. Financial economics 101. Even Milton Friedman supported this.

    @ John A

    I do not like bashing the local press, but where is their magneton? Why can’t they appoint specialist reporters? Economics? Caricom? Politics? Health? With specialist reporters you get more in-depth reporting. The purpose of the media is to educate, inform and entertain. Our media fail on all those fronts.

    Liked by 1 person

  • Vincent Codrington

    @ John A at 9 :07 AM

    Short answer as to my recommendation of acceptance? No.
    .Please refer to an article uploaded by Pachalacha outlining the model which inadvertently he proffered because he assumed that I was mathematically challenged. You may be witnessing an experiment in Game Theory with a high propensity of Barbados getting “huff”.

    Like

  • @ Hal

    Yes you are right but ours is to entertain and pander to the political elite. Plus the majority of Bajans love that!

    I will say something now that may annoy many, but based on the 2 offers made as were published I too would of refused both. Not only are you asking me to lose over 33% of my capital in one and forfeit all interest in the other, but you ain t even guaranteeing that return with your so called ” disaster clause” serving as a get out of jail free card in case of heavy rain.

    Cuss me all you want that’s my view based solely from looking at it without bias to either party.

    I will go further and say that the international finance market would also of turned these offers down so the GOB will get no sympathy there either.

    Liked by 1 person

  • @ Vincent

    I agree we will never come out of this a winner. Our offer is weak and does not hold up to financial scrutiny. The ” disaster clause ” also reeks of a government looking for a loophole to default again on their commitments. If this is the best WO could come up with after 13 months at $85000 A month fire them now!

    Liked by 2 people

  • @ 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.

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  • @ 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.

    Like

  • 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

    Like

  • @ Hal

    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.

    Like

  • White Hoax what a joke

    Like

  • William Skinner

    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……….
    Absolutely brilliant

    Liked by 1 person

  • @ Hal

    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.

    Like

  • @ 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.

    Liked by 1 person

  • @ Tron June 18, 2019 9:51 AM

    LOL!!!

    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”?

    Like

  • @ Hal

    Problem is we got this misguided idea we are heavy weight when in fact we in the super light weight class.

    Like

  • 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.

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  • fortyacresandamule

    @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.

    Liked by 1 person

  • (Quote):
    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!

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  • @Fortyacres

    Thanks, this is the point we want those here pointing to Jamaica as the model to understand.

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  • @ 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.

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  • John A

    Please stop that foolishness about the event of heavy being a disaster

    A Disaster is a devastating hurricane, earthquake, or tsunami

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  • key word is DEVASTATING

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  • William Skinner

    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.
    Sounds familiar?

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  • William Skinner

    Patently incorrect not incorrectly

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  • 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)

    Liked by 1 person

  • Vincent Codrington

    @ Hal at 1 :32 PM

    Just speculating.
    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.

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  • @ Vincent

    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.

    Liked by 1 person

  • @ 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.

    Liked by 1 person

  • @ Vincent

    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?

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  • Cryptocurrencies have no long-term future

    Wrong!
    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?

    https://www.bbc.co.uk/news/business-48664253

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  • 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!

    Liked by 1 person

  • @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.

    Liked by 1 person

  • When and where has the blogmaster plugged BITT? By BITT you mean bitcoin or Bitt.com. Asking for a friend.

    Like

  • @ 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.

    Liked by 1 person

  • @ Dullard,

    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?

    Liked by 1 person

  • 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?

    Liked by 1 person

  • -Abel + Abed

    Like

  • JOHN A

    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.

    Like

  • fortyacresandamule

    @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.

    Liked by 1 person

  • You need to reread with comprehension.

    Like

  • @ Dullard

    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.

    Like

  • @Fortyacresandamule

    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.

    Like

  • But, as we return to normality

    @Hal
    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?

    Newsflash!
    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.

    Liked by 1 person

  • @ Dullard

    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.

    Like

  • John A.

    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

    Like

  • If BLP in powuh – YES. If DLP – NO

    LOLOL

    Like

  • There is a universal definition for what is a national disaster.

    Like

  • 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
    Josh Constine
    @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.”

    Like

  • @ Dullard

    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!

    Like

  • @ Dullard,

    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.

    Liked by 1 person

  • LOL@d Dillard

    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.

    Like

  • 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.

    Like

  • @ David.

    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.

    Like

  • 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.

    Like

  • @John A

    No point missed. Unless you are privy to the wedge issues at the negotiating table it is a guessing game.

    Like

  • 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?

    Like

  • @John A

    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.

    Like

  • David
    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

    Like

  • @ 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.

    Like

  • William Skinner

    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.

    Like

  • @John A

    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.

    Like

  • @William

    You are aware Jamaica and Barbados became voluntary members of the IMF for a reason?

    Like

  • @ David.

    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.

    Liked by 1 person

  • @John A

    Expect the creditors to respond. The Barbados government obviously has decided to play the game.

    Stay tuned.

    Like

  • William Skinner

    @ David

    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.

    Good luck

    Liked by 1 person

  • @ 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 !

    Like

  • @William

    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.

    Like

  • William

    Barbados when to the IMF and recovered.
    We are to blame for being back there not them (IMF).

    Like

  • @ 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?

    Liked by 1 person

  • @ Miller

    Good point yes after all we were promised transparency.

    Liked by 1 person

  • William Skinner

    @ 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.

    Like

  • Vincent Codrington

    @ 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.

    Like

  • Vincent Codrington

    @ Miller at 5:17 PM

    You are something else and a piece ‘pon top.

    Like

  • @ Vincent

    I will try as you say to walk away from futile discussions. Maybe I better start using your ZR approach.lol

    Liked by 1 person

  • @ William

    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.”

    Like

  • fortyacresandamule

    @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.

    Liked by 1 person

  • Sorry spend not sell

    Liked by 1 person

  • @John A

    We have only ourselves to blame.

    Like

  • William

    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.

    Like

  • @ David.

    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..

    Like

  • William

    Would you say the USA recovered?

    just curious

    Like

  • @John A

    Will the real leaders stand up?

    Like

  • A

    Didn’t the government say it is not borrowing for the next four years?
    You are not getting what you , a complete stop, but……..

    Like

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