Grenville Phillips – Please Do Not Drop Our Bone

grenville-phillips

Submitted by Grenville Phillips II

In 2010, Barbados was impacted by Tropical Storm Tomas. It caused at least $57M in damage to approximately 1,200 houses in Barbados. By that time, our national Catastrophe Fund had grown to $23M, but it was not used.

When commenting on the unplanned additional expenditure, former Prime Minister Stuart declared: “I have to confess that I was flabbergasted at the fragility of the housing accommodation in Barbados.” It remains fragile to this day.

During the severe economic challenges of the last decade, Barbadians sacrificed to grow the fund to an impressive $50M. The purpose of this fund is to prevent us from being destitute, after we are impacted by a natural hazard. Previous administrations resisted the real temptation to use it for other purposes.

The Government intends to use this Fund, to give one year no-interest loans to large businesses who pay VAT. In return, these businesses must maintain at least 75% of their employees.

Solutions Barbados supports the idea of providing businesses, who make VAT payments, with one year no-interest loans. However, we strongly disagree with raiding our national Catastrophe Fund to do so. Why not source the loans from the VAT payments already made by the same businesses?

Dropping the Bone.

To justify emptying our Catastrophe Fund, the Government is relying on the disaster clause in our external debt agreements. This clause allows us to avoid making debt payments for two years, if we are impacted by a tropical storm of the strength of Kirk, in 2018.

The Government should be highly commended for negotiating such an innovative disaster clause. If we are devastated by a natural hazard, then two years should be enough time to restart our economy and repay our debts. However, forcing us to give up our secure bone, for a future illusion, is extremely unwise.

The Government is dangerously relying on two unverified assumptions. The first is that the current and future administration will always have access to funds, that were to repay creditors, after an impact.

Obviously, if we made the debt payment the week before we are impacted, then we would be in serious trouble. It is clearly foreseen that there will be no debt money available, and no Catastrophe Fund.

The second is if we are impacted by a tropical storm, with less sustained winds of Tropical Storm Kirk, but greater wind gusts of Tomas. This may disqualify us from any benefits of the disaster clause. It is foreseen that we would have to repay our creditors, and have no Catastrophe Fund.

Tropical storm gusts can cause devastating damage. Therefore, is the disaster clause triggered on the sustained wind speed or the gust wind speed? If it is the gust, then we are much less exposed than if it is the sustained.

Kirk had sustained winds of 57.5 mph when it was closest to Barbados. However, since it was 40 miles north of Barbados, we only experienced sustained winds of about 40 mph and gusts of 46 mph. In comparison, Tropical Storm Tomas (2010) impacted Barbados with sustained winds of about 53 mph, and Hurricane strength gusts of about 105 mph.

Before the Government empties our Catastrophe Fund, we should know how exposed we are. Therefore, we need to know the details of what was negotiated on our behalf – please.

Grenville Phillips II is a Chartered Structural Engineer and President of Solutions Barbados. He can be reached at NextParty246@gmail.com

14 comments

  • Dentistry Whisperer (M. Pharm. D) LinkedIN

    Mia, The supply chain of “kool-aid” is rupchured resulting a low stock pile.

    Like

  • Bajan Free Party 2023 0r sooner

    The Number we heard was 30 Million when MOF Chris wanted to go after that money! When you vote for crooks expect to be robbed! The amount of money coming does not reach the people and with no Rule of Law being enforced this will go on until they are stopped, They all have to be removed each thing done is to cover up other things done being done or about to be done! Bajan Free Party 2023 or sooner!

    Like

  • Anything that is not locked down in this crisis govt going to raid
    Nothing this govt does to support big business appetite for more of the tax payers money is surprising
    Govt has proved many times over with their first concessions to business after being elected whose mouths would first be fed

    Like

  • Now watch how the boot stomping govt defenders line up to cuss me

    Like

  • Mari 4 hiurs have passed and nobody has cussed you.

    All sensible people know that we are stuck between the devil of a category 5 hurricane, and the deep blue sea of Covid19.

    Did youknow that un Carib cosmology Hurracan was THE DEVIL.

    Yup , he the big bad guy that everybody is RIGHTLY afraid of.

    Like

  • WURA-War-on-U

    Any hurricane hits the island this year or next year, even thinking about it is terrible and the fools for leaders should be held accountable, if the NIS was not broke they would raid that too…just to maintain a stinking status quo because they are too dumb to make intelligent changes TO BENEFIT THE PEOPLE WHO ELECTED THEM, now that the opportunity has presented itself..

    Like

  • Uneasy lies the head that wears the crown.

    Liked by 1 person

  • NorthernObserver

    If the Catastrophe Fund was $23M in 2010, and the last unaudited valuation was in 2017 of $40M, 70% of which was in T-Bills, 26% were ‘deposits’. Memory is the restructuring, converted T-Bills to Bonds and ‘kicked maturity down the road’. Having trouble arriving at its value, even if the Bonds were redeemed early.

    Liked by 1 person

  • The government’s decision to utilize 50 million dollars in the catastrophe fund makes sense if over one billion will be freed up if the disaster clause is activated.

    Like

  • No Solutions Barbados, UDP and other third parties invited to VOB studios today.

    Like

  • @ David,

    The former leader of the DLP has been effusive in his praise of the government. lol

    Like

  • @Hants

    He seems to be government’s biggest supporter to breathe life into agriculture. It would be interesting to go back to the Arthur days when he was part of the mix to look at his views then.

    Like

  • @ the Honourable Blogmaster.

    Dr GP my fellow and apostate and I realise that we have done an excellent job when even you are using the very salutation that we use to address ISO Taliban aka Bedroom Police aka Buy WUnna own Casket aka 3 Weeks to Live

    You said and de ole man quotes

    “… David May 3, 2020 11:53 AM

    No Solutions Barbados, UDP and other third parties invited to VOB studios today…”

    You called Grenville NO SOLUTIONS BARBADOS!!!

    Heheheheheheheheheheheheheeheheheheh

    Finally!!!!

    Job Done!!

    No need to change your text de ole man has screen shotted your comments for posterity

    Liked by 1 person

  • Hiding Our Beans.

    On last Sunday’s Brass Tacks (3 May 2020), Dr Clyde Mascoll ignored every one of our concerns about emptying our national Catastrophe Fund. If Dr Mascoll does not want to respond to important questions, then the Government should send out someone else.

    Whenever Dr Mascoll, or his fellow consultants, or any of the Ministers of Finance speak about the disaster clause, the story seems to change. For example, The Prime Minister stated that the disaster clause is triggered by a Tropical Storm. Dr Mascoll upgraded the trigger to a Hurricane. What is the truth?

    We urge Dr Mascoll to answer the following important questions. It is better to know the answers now, than unnecessarily dispute them after the impact.

    1. Is the trigger based on the: sustained wind speed, gust wind speed, barometric pressure, or a combination of these parameters?
    2. What is the magnitude of the parameter or parameters that trigger the disaster clause?

    3. Are the wind parameters measured: on land, within Barbados’ exclusive economic sea zone, or at the centre of the weather system at the closest distance to Barbados on impact?

    4. After the two-year suspension of debt-payments, are all unpaid payments due immediately?

    5. Is the Catastrophe Fund to be replenished for later administrations, or abolished?

    6. Suppose we made our major debt payments one week before we are devastated by a major hurricane. Would the debt payments from year two not come from revenues from year one? Would revenues from year one (the year of impact) not be expected to decline significantly. Therefore, from where would the $1.7B be unlocked?

    7. Why must the disaster clause remain a secret?

    Grenville Phillips II is a Chartered Structural Engineer and President of Solutions Barbados. He can be reached at NextParty246@gmail.com

    Like

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