The Central Bank of Barbados economic review of the economy was delivered today by Governor Cleviston Haynes.
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@ David May 1, 2020 9:20 AM
The position is in agreement with what John A posited @ May 1, 2020 9:41 AM.
Both The Guv and the PM are merely parroting what has been discussed on BU over the last two weeks.
Wouldn’t be surprised if the Guv is an avid reader of BU the goldmine for ideas about how to face the future whether these ideas are ‘practically’ realistic or pure speculatively idealistic proposals like those of the Pandemic bonds denomination.
How about doing what PM Sandiford, a real leader, did and face this challenge head on?
Why not ‘Cut’ salaries and other emoluments across the board until the economy finds itself back into a more affordable position the same way the political class did under the previous administration as a token show of national sacrifice?
It’s either cuts in pay or further job losses in the public sector.
This is the Hobson’s choice facing the private sector especially those businesses in air travel industry.
Some discretion could be made by way of a special duty allowance for those in the essential services especially those at the coalface of the Covid challenge similar to how the NHS staff in the UK are treated for their bravery and commitment to national survival.
@Miller
We are operating in times like no other. All that is left is for our leaders to lead.
A person named Sandra has accused me of spreading ideas that are more dangerous than the Wuhan plague. Specifically, it was about devaluation.
Now our beloved Prime Minister is basically saying the same thing when she conceives the introduction of pandemic bonds.
Is Sandra trying to imply that Mia Mottley is the most dangerous woman in Barbados? I suggest that Sandra come here to the forum and apologise publicly for her blasphemy. Mia Mottley obviously wants devaluation, like Tron, but in a nicer package.
@ Miller May 1, 2020 10:57 AM
Duly noted for the record:
The idea of pandemic bonds originated in St. Lucia. I transplanted that idea to Barbados.
So you can thank me when you are paid out in bonds in the future. LOL.
The idea of pandemic bonds originated in St. Lucia
Not really. The original idea was hatched by Wall Street and the World bank. What the PM is describing is a bit of a misnomer because these are not true pandemic bonds as payout is not linked to any pandemic trigger event. In fact there is no payout at all.
The PM is simply raising taxes to fund government business with a promise to refund the taxes raised at some later date.
https://en.wikipedia.org/wiki/Pandemic_Emergency_Financing_Facility
Investors are being offered the chance to save the world and earn a juicy return at the same time, with the launch of a new type of bond to tackle outbreaks of pandemics.
The World Bank launched the first-ever pandemic bond on Wednesday, raising $322m in two separate three-year issues. It also issued over $100m of swaps offering pandemic protection.It is the first instance of the World Bank using its financial capacity to combat infectious diseases.
The bonds will pay investors a regular coupon, in exchange for which they lose some income or capital if a catastrophic infectious disease takes hold.
The funds will be channelled to developing countries facing a pandemic, and to charities and rescue organisations working in those countries, in a bid to tackle what the Bank regards as one of the greatest systemic risks facing the world.
The initiative was inspired by the 2014 Ebola outbreak in west Africa, which killed 11,000 people, mostly in Guinea, Liberia and Sierra Leone.
International donors spent $7bn to fight the disease; if the affected countries had had access to finance in the early stages of the contagion only a tenth of those deaths would have occurred, the World Bank estimates.One of the new bonds, priced at 6.5 per cent over six-month US Libor, will cover pandemic influenza and coronaviruses such as SARS, while the other, priced at 11.1 per cent over US Libor, will cover filoviruses such as Ebola, and several types of fever..
Insurance triggers will include the size of the outbreak, measured using World Health Organization statistics on the number of cases and deaths, and whether the disease is growing at an exponential rate, as well as its geographical spread, with the payout value depending on the number of countries impacted.
The launch of the bonds is the latest innovation from the Bank which has also issued $1.6bn-worth of catastrophe bonds to raise finance to tackle natural disasters, as well as sustainable development bonds to promote ethical investing and green bonds to pay for environmentally friendly projects.
It also marks the latest evolution in the investment world’s debate over ethical finance, which some market observers have dubbed a shift from shareholder activism to the emergence of more socially-conscious decision-making by bond fund managers.
Jim Yong Kim, World Bank Group president, said the institution was “leveraging our capital market expertise, our deep understanding of the health sector, our experience overcoming development challenges, and our strong relationships with donors and the insurance industry to serve the world’s poorest people”.
The new pandemic bonds will be managed by the Bank’s Pandemic Emergency Financing Facility, which is backed by the German and Japanese governments and was unveiled last year. It aims to create a new insurance market for pandemic risk, including raising $500m in financing.
Swiss Re Capital Markets was the bookrunner, and acted as joint structuring agent with Munich Re. Munich Re and GC Securities, a division of MMC Securities, were co-managers.
Swiss Re Capital Markets, Munich Re and GC Securities were also joint arrangers on the derivatives transactions.The issues were twice oversubscribed and priced at below the original target price…..(Quote)
What is the structure of the pandemic bonds, or are we being asked to buy a pig in a poke? Does the president think we are dumb? Only two years ago she defaulted on her debt.
@Dullard
Is it about bonds or more about how the government has to find a way to support 40% of the displaced workforce who have to eat. Their children too.
Buy what bonds and from who? Remember the entire group of bondholders were swinged recently in the restructuring. So you can’t seriously expect to now come back and sell them more bonds ” backed by and in the good name of the Barbados Government.”
The solution is for government to cut their spending by 30% starting with the 30 MPS salaries. Also what is the difference between Sinkyuh money printing and you creating Covid bonds at ” attractive rates.” All is printing money whenever done instead of addressing the elephant in the room, which is the cost of government.
I know see why wunna give Chris a pick on the board, you needed an experience money printer in the group to oversee the Xerox machine. LOL
@ Dullard May 1, 2020 11:26 AM
Yes and no. The WB refers to a financial construct for institutional investors, some kind of an insurance policy.
We’re about fleecing the citizens. Call it internal devaluation, massive tax increases, forced loans, whatever you want.
The government takes this path because it is afraid to cut public sector salaries or lay off superfluous civil servants. This should be made very clear here.
@John A
Can the government force compulsory purchase of bonds under emergency laws?
Who are the members of the high-flying CoVid economic council? Who appointed them? Was this announced in parliament? Whose idea was the stimulus?
Someone please answer. Plse let me know if we are still a democracy. Undemocratic governments often use the umbrella of an emergency/crisis to force through undemocratic laws.
@ John A May 1, 2020 11:43 AM
It is obvious that the private sector (banks, businessmen, workers) will bear the main burden. The rotten state apparatus with its 30000 lazy natives will be spared once again.
@ Tron
You a re playing fast and loose. Bonds meant for institutional investors differ very little compared with bonds meant for a retail market, apart from tougher regulatory framework for the retailers.
@Tron, admit your leader does not have a clue what to do: where are the BERT economic consultants? How about BEST? Now the stimulus?
Can someone at Cave Hill – or the Nation, or the BU think tank – please explain in simple terms these conflicting economic policies? Have you noticed no one is discussing the content of the stimulus, apart from ‘printing money’?
@ David.
I don’t think the individual Barbadian can be forced to buy the bonds but Government can get around that as Sinkyuh did when he “instructed” the commercial banks to take up more government paper. Thing is with a win of 30 to O they can implement legislation to do what ever they want. Remember when Trinidad took the USDs in Trini people accounts and told them ” wunna hold these TT dollars instead?
Of note is that Prime Minister Santia Bradshaw (Ag) appears on the amended emergency order to take effect from May4, 2020.
@ Hal Austin May 1, 2020 11:56 AM
I see it quite differently with the bonds: The WB pandemic bonds run on a voluntary basis. The announcement in Barbados (” how best can the rest of us AGREE to take”) amounts to a compulsion. Just like taxes. Also: The WB bonds are a kind of insurance. The local bonds are only another tool of state financing because the government does not dare to abolish the civil servant privileges.
It is obvious that the whole actionism follows political standards and not economic rationality. I call this the logic of the ballot box. Civil servants represent the largest group of voters. The government will therefore do everything it can to nourish the civil servants, even if the rest of the island falls apart.
@John A
As usual you understand the realities and possibilities facing us. These are abnormal times. Some may say desperate times.
Is it about bonds or more about how the government has to find a way to support 40% of the displaced workforce who have to eat. Their children too.
Not disputing the presence of vulnerable groups. That’s not point.
But the Dullard wonders:
— Would the GOB have had more flexibility in terms of financing options if the gov’t in its infinite wisdom had not rushed to default 2 years ago?
— What will be the government’s argument be if the Central Bank turns on the printer again? The Governor admitted that is a real possibility.
— What is the point of White Oaks and are they still being paid? What for?
— Were the last 2 years of economic purgatory just a colossal and unnecessary waste of time effort and money?
@Tron
The problem is the state can not implement more taxation now especially with an economy that is already going to tank double digits as the governor said.
Government now has to look at their figures laid in the last estimates and say “ok if we lose $500M in revenue between now and March 2021, where can we cut back at least $250M in our spending.”
If they don’t do that the only other options are further taxation or printing money in what ever fancy name you give the bonds or activity.
So in other words the roads that aint get fix yet will stand so for now, the fancy park in town will stand so for now etc.
Any approach other than this is doomed to failure in an economy predicted to lose double digits of its worth over the next 11 months. Plus any additional taxation will not only stall recovery, but may well deepen the recession.
@ Tron
The economics behind the stimulus are bogus. The government in a democracy cannot force householders to lend them money (bonds), then pass it on AGAIN to the wealthy hotel owners in the form of a Bds$200m so-called tourism recovery fund.
Watch my lips: tourism is in intensive care and will be there for at least two years. The thinking behind this is as bogus as the CoVid economic council.
What I want to see is a full list of the members of this CoVid committee, which was so important the president came off her sick bed to announce.
Don’t laugh, but Chris Sinckler is chairing a trade and logistics sub-committee, the man who was finance minister for nearly ten years and crashed the economy.
I know @Willim talks about the duopoly, but do you think they have their Champagne with their mates in Cattle Wash and laugh at the plebs?
@Dullard
How is your speculation relevant to the problem at hand? We all know the state of the economy pre May 2918. We were are junk status forced to borrow at high rates. Try to bring your argument forward. How does the government keep people fed that will be displaced for god knows how long? Is there a script you are following we can see?
@ Hal
Stop Making sport bout Sinkyuh chairing a committee. Where you hear that story from?
The only committee he qualify to chair is the Photocopier Purchasing Comittee!
Stop spreading bad rumours do!
@ David May 1, 2020 11:32 AM
“@Dullard
Is it about bonds or more about how the government has to find a way to support 40% of the displaced workforce who have to eat. Their children too.”
+++++++++++++++++++++++++++++++++++++++++++++++++
It’s going to be miraculously convincing a task for MAM to retain the current size of her obese cabinet current over-packed with an army of occupation and thumb twiddlers.
With the appointment of the Covid Council (CC) what else is there left for ministers to do but pass on the policy proposals from the many chairs in the CC as mere carbon copies to the top servants in the bureaucracy of Do nothing & File 13?
The country needs a council of real movers and shakers aka doers.
Not a choir of bullshit talkers.
Now why haven’t retired bullshitters like Boo(ze)s been appointed to the parliament of drunken confusion?
Is Barbados the hub or capital of 20:20 entrepreneurship?
Why not Dr. Leroy McClean a man of no nonsense?
The once fatted calf for a black belly sheep is now totally stripped of all its rotting flesh with only the marrow from the bones available for partisan political succour.
@John A
Could be the PM is giving Sinckler responsibility for trade matters given his academic training and position as former Executive Coordinator of the Caribbean Policy Development Centre (CDPC)? He is fit for purpose they say in his appointed role.
Just saying!
@ Dullard May 1, 2020 12:12 PM
“Is it about bonds or more about how the government has to find a way to support 40% of the displaced workforce who have to eat Their children too.”
This reasoning could also come from the government. It is skewed in that it conceals the fact that the government has not yet made any cuts in the civil service despite the crisis. The pandemic bonds are not intended to protect the socially weak, but to protect 30,000 highly privileged civil servants.
We must emphasize again and again that every Barbadian government always means the civil servants when it speaks of the socially weak.
@ John A
You are being disrespectful to the Rt Hon Chris Sinckler, MA(economics). Seriously, only two years ago the voters of Barbados kicked out this grossly incompetent finance minister and his mates and now our president, with very little consultation, returns this man to the frontline of public policy to come up with ideas on trade.
When this is pointed out on BU, some neurologically challenged people come out fighting. This is not just an insult to the people of Barbados, it is an insult to their intelligence.
Do they really think this contempt for the people is acceptable? Notice not a single voice of objection from the 28 other members of parliament; not a single resignation, or threat of resignation.
@ David May 1, 2020 12:32 PM
I agree. The pool of talent is very limited. Among 100 people, you’ll find one top performer, 9 good workers, 80 percent slackers and 10 idiots.
@ David.
I maintain what a man couldn’t get do when he was MOF for ten years, he will never get done now. I see his inclusion as one of the biggest mistakes the PM has made since coming to office, as well as a slap in the face of the electorate.
Anyhow maybe I will be proven wrong and cows will fly too.
@John A
You are an unforgiving man. Please examine your heart and wheel and come again. A second chance is all some people need to shine.
@John A
Sinckler’s appointment is a demonstration of arrogance, of chutzpah. Contempt for ordinary voters.
Agree. The Barbados Council for the Disabled should be very happy about this inclusion.Inclusion is a modern concept.
@ Hal
I feel exactly as you do, the man clearly does not have a clue on the practical application of Finance policy. After all we had what 6 reincarnations of his policies, which resulted in 20 downgrades as our reward.
The type of thinking and planning needed for the recovery I can’t see him having. The level of radical change needed to our economy will require out of box thinking. The normal political partisan approach will not work here. We are not talking about tweaking the economy or government here, but radically restructuring it in order to survive.
@ David May 1, 2020 12:45 PM
The man is a certified liar. Unless he confesses his sins of preposterous lies to the court of Barbados we cannot see how John A can be considered an “unforgiving man”.
We are dealing with a man who once said in one of the public broadcasting media that when he finishes his ministerial stint in politics he will seek to fulfil his lifelong ambition of becoming a man of the other brand of ministerial cloth worn by the clergy.
We await his fulfilment of that promise as penance for those he failed to do as a member of the Cabinet of worthless saints.
@ John A
What is amazing is that Sinckler had the audacity to accept the offer. Is @Verla in charge of the DLP? He should be suspended, at the very least.
Don’t fall for the president’s nonsense of corporatism – we are all in it tougher, even the so-called Social Partnership.
@ David
It’s not about unforgiving it’s about not putting another square peg in a round hole. This exercise will not offer any second chances to Barbados, if we get it wrong the first time. Economic advisers are usually picked based on their successes, not their level of failure. I don’t think many in government understand the radical level of fall off this economy will take when businesses open. If government waits to the end of the second quarter for Vat figures etc to come in to guide them, it will be too late. Who are the business people with their finger on the pulse of the economy in this gathering? Who are the people I am to put my faith in for recovery?
What is the plan to replace FX earnings from the tourism sector in the short to medium term?
Why hasn’t the agenda that will be given to this committee by government been published so we can all read it?
The answer is simple and it’s nothing has been done about it yet.
Tic toc tic toc goes the clock in the meantime.
@Miller
For a moment there were you sweet on using the yarn that he was told by a Sargeant of some threat to his life?
@John A
We pray that Chris has had his damascene moment and the country at a time of need will benefit by it.
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@ Hal.
No way thank God I can think for myself and understand enough to see when a plan is workable or not. Remember how we all got cuss when we said Sinkyuhs plan would not work? Remember how we got cuss again when we said BERT as outlined could not produce growth?
Well I waiting to see the agenda given to Sinkyuh and others before I pass judgement there too.
@ David.
No matter how much you train a mule it will never win The Sandy Lane Gold Cup my friend.
“Former Prime Minister, Professor Owen Arthur, chairs the Industrial Transformation group, which is looking at How to create 20,000 jobs in 18 to 24 months; …”
Has anyone noticed that Mr. Arthur is the only one on this committee who has been given a concrete target to hit? Everyone else has been tasked in broad generalizations and so the output will also be similarly broad generalizations. But not poor Owen… There is no way to finesse this, either state forthrightly how employ 20,000 people within 2 years or you are a failure. Brutal.
So let us give poor Owen a hand and help figure out “How to create 20,000 jobs in 18 to 24 months;” it sure beats stale debates about who should have done what about the NIS and whose fault is that anyway…
@ John A
Kerrie Symmonds is not the brightest spark in the box, but he is now talking about reviving tourism. BA and Virgin Airways, the two flights out of \Gatwick to the Caribbean, ar e in serious financial difficulty. BA has already said it may abandon Gatwick.
A fall in GDP in the US in double figures will be the biggest since the creation of the Bretton Woods organisation; the boss of Boeing has warned that air travel will not return to 2019 levels for two or three years.
They live in a dream world. Long haul tourism is a discretionary spend; not even overseas Bajans will be rushing to buy tickets to travel to their homeland.
Here is what they should do with the Bds$200m tourism fund – use it to buy debt for equity in the hotels holding out their hands. I bet if they did that the begging hotel owners will run away.
Why not use the $200m to fund start-ups? The Mottley government is ripping off the taxpayers; or they do not have a clue.
@ PLT
Owen has the easiest job – employ 20000 civil/public servants.
” Faced with an expected revenue loss of about $500 million, Government is banking on receiving a $600 million injection from multilateral financiers.”
Injection means loan. How will this loan be repaid ?
PLT,
I’ve been trying to convince Piece the Prophet that OSA is on Mia’s hit list. Think of all the other jobs he’s been given: LIAT and GECOM. LIAT only exists on paper now, GECOM in Guyana has not yet counted the March ballots today.
Actually, however, this is completely irrelevant, since nobody expects success. Most of the tourists will stay away even in winter, everything else is wishful thinking. All that remains is to teach the naive masses that the fat years are finally over. This is hard enough. Since 1966, teachers at school and politicians have been preaching that life in Barbados is stress-free and all you have to do is wait for some foreign Massa to bring the roasted chicken. The masses are no longer able to take entrepreneurial initiative at all because they are sedated by the welfare state as if by drugs.
This is our current reality:
Barbados = RMS Titanic
COVID-19 = Iceberg
IMF debt = Cold and unforgiving North Atlantic
Private Infrastructure & Construction – $1.08bn = dysfunctional lifeboats
Government public and capital works – $324m = Deck chair #1
$40 million – Interest free VAT loans = Deck chair #2
$20 million Small Business Wage Fund = Deck chair #3
$130 million – Tax Refunds = String section of the orchestra
$200 million – Tourism Working Capital Facility = Brass section of the orchestra
There is some valid repair work going on below decks but it is not yet sufficient to save the vessel:
Renewable energy – $360m towards a Green Energy Park
FEED Programme Initiative
@ PLT
That is exactly what I been asking for and that Is to have the agenda given to these committees published for the tax payers to read and digest.
@John A
We are speculating about the mandate of the committee. Why not join PLT and move the discussion forward as if your were chairing or on one of the committees.
@ Hal.
Yes I read the statement made by BAs parent company and reading between the lines it looks like they are planning to return some of their fleet to the leasing companies. I don’t think they are looking at a part time fix but more a thinning of the fleet going forward.
The blogmaster invites you to join the discussion.