Grenville Phillips – Please Do Not Drop Our Bone
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