Barbados: Debt Warning, Foreign Reserves Watch

debt

The latest chatter on the local newsfeed is about Barbados’ scheduled repayment of $928 million dollars by end of 2029. To avoid attracting the wrath of government’s senior economic advisor Dr. Kevin Greenidge, Barbados borrowed $870 million since 2018, the difference of $58 million is interest due supporting Greenidge’s argument that IMF money is the cheapest in town if compared to what is available on the open capital market. 

The blogmaster is happy to observe the concern being expressed by all and sundry about the accumulation of the public debt- foreign and local- by the BLP government since 2018. However, we should not forget how we got here.

Successive governments have been responsible for our current debt level which is reported to be about $13 billion. Barbadians have been reassured by Greenidge the $870 millions borrowed from the IMF represents a small 6.4% of total debt. Wonderful. The government has stoutly defended the borrowing by reminding the debt level was 18 billion when the Mottley government took office in 2018. Ideally if the pay down was from earnings, we could be satisfied the country was positively addressing repayment BUT it was largely due to a debt restructure.

We read retired professor UWI Michael Howard skepticism presented in the press this week and Dr. Robinson had his say in today’s Nation. The debt is too high. However given the design and current state of the local economy it is a problem we will have to tolerate for a generation or two IF corrective measures are taken now. 

A more immediate concern is protecting the health of the foreign reserves. The longer the conflict between Ukraine and Russia continues and serves to undermine the global financial market and disrupt global supplies to small island developing states, there is a chance of foreign reserves being compromised. It was reported the increase in import cost of fuel for Q1’22 compared to last year was significant. The the root of the debt accumulated is successive governments lazily satisfying the conspicuous consumption behaviour of citizens. Citizens have skin in this game.

The crisis that is unfolding in Sri Lanka should remind small developing countries like Barbados what is possible. This week the government of Sri Lanka banned the sale of fuel for two weeks. A person does not have to be ‘smart’ to understand the implications of making such a drastic decision. 


Sri Lanka suspends fuel sales for two weeks as economic crisis worsens

Ban on sales to everything except essential services comes as nation tries to conserve fuel supplies that are barely enough to last a single day

A Sri Lankan security official stands guard outside a fuel station that ran out of petrol in Colombo, Sri Lanka on Monday.

A Sri Lankan security official stands guard outside a fuel station that ran out of petrol in Colombo, Sri Lanka on Monday. Photograph: AFP/Getty Images

Agence France-PresseTue 28 Jun 2022 01.30 BSTLast modified on Wed 29 Jun 2022 05.10 BST

Cash-strapped Sri Lanka has announced a two-week halt to all fuel sales except for essential services and called for a partial shutdown as its unprecedented economic crisis deepened.

The south Asian nation is facing its worst economic meltdown since gaining independence from Britain in 1948, and has been unable to finance even the imports of essentials since late last year.

As fuel reserves hit rock bottom with supplies barely enough for just one more day, government spokesperson Bandula Gunawardana said the sales ban was to save petrol and diesel for emergencies.

Long queues at the Department of Immigration and Emigration in Battaramulla, Sri Lanka.

Read more

He urged the private sector to let employees work from home as public transport ground to a halt.

“From midnight today, no fuel will be sold except for essential services like the health sector, because we want to conserve the little reserves we have,” Gunawardana said in a prerecorded statement.

He apologised to consumers for the shortages: “We regret the inconvenience caused to the people.”

https://www.theguardian.com/world/2022/jun/28/sri-lanka-suspends-fuel-sales-for-two-weeks-as-economic-crisis-worsens

329 comments

  • David

    What are your thoughts?

    A new regional carrier is urgently being discussed between Guyana and the Caribbean Community (CARICOM), according to Prime Minister Ralph Gonsalves.

    He made the announcement at a press conference following the 43rd meeting of CARICOM heads in Suriname.

    Prime Minister Gonsalves said the establishment of this new regional carrier is “a matter of urgency”, especially with renewed efforts to facilitate free movement within CARICOM.

    It may well be a revival of LIAT in some form or another, Gonsalves said.

    To establish a framework for the new regional airline, however, an aviation consultant will be needed, according to the Prime Minister.

    “… but it has to be done quickly,” he added.

    Antigua and Barbuda, Grenada, St. Vincent and the Grenadines, St. Lucia, Barbados, Dominica and Guyana will lead discussions on the new airline. [St. Vincent Times]
    ~~~~~~~~~~

    Perhaps the Mia Mottley administration should learn from the mistakes made by previous BLP & DLP administrations, and consult with Barbadians before investing taxpayers money into another regional airline.

    Like

  • @Artax

    Are you excited by the talk?

    The blogmaster is in wait and see mode. HoGs have done nothing in recent memory to inspire confidence.

    Like

  • ‘Impose sanctions on tardy officers’

    Auditor General Leigh Trotman, concerned that Government ministries and departments are being delinquent in providing timely financial information to his office, wants “credible sanctions” introduced to improve the situation.
    He is recommending an amendment to the Public Finance Management Act to include fines and jail time for public sector officers who do not meet requirements for providing information to the Barbados Audit Office in a timely fashion.
    Trotman raised his concerns in his 2021 annual report to Parliament, as he called last year “another challenging year for the Barbados Audit Office”.
    He said the COVID-19 pandemic affected his department’s operations “due to a reduction in available man-hours, and the challenges faced in obtaining various documents and files for review from the ministries and departments”.
    “As the year drew to a close, various measures were instituted to mitigate the impact of the challenges highlighted,” he reported.
    However, Trotman also said that there were “other factors outside the control of the Audit Office which impact the progress of audits, and these include a lack of timely response by ministries and departments to requests for information by auditors and the inadequacy of their responding to audit queries”.
    Supplying information
    “It would appear that some ministries and departments’ heads are not fully aware of their responsibilities and are delinquent in supplying requisite information. This matter needs to be addressed going forward if my reports are to be timely and be of benefit to stakeholders,” he said.
    The Auditor General requested an amendment to the Public Finance Management Act of 2019, which he believed “could improve this situation”.
    “Under Section 13 (5) of the Public Finance Management Act, 2019-1, if a person refuses to produce any records or information as requested by the Comptroller General,
    that person is liable on summary conviction to a fine of $10 000 or to imprisonment for a term of 12 months or both,” Trotman said.
    “This provision should also apply to the Auditor General. Officers in ministries and departments should be aware that credible sanctions can be imposed if they fail to cooperate with the Auditor General,” he added.
    Vacancies
    Trotman also reiterated a call for his office to be better staffed, noting that “since taking the post of Auditor General in 2006, I have requested the filling of a number of vacancies, and a few additional staff have been supplied”.
    “However, the rate of loss of staff due to retirement, transfers or resignations has far outweighed the number added. This has resulted in a chronic shortage of manpower, especially at the management level and results in executive management having to take on additional responsibilities, such as leading audit teams, which is not the best use of this resource,” he said.
    “The Audit Office needs to be in a position to directly recruit officers in a timely manner. These officers have to be trained in order for them to be effective, so it is important for this process to commence, and I have also suggested the introduction of a cadet programme, where graduates and other suitably qualified individuals could be trained. This would allow for a greater pool of persons to be available for selection to fill the posts in the office.”
    Trotman also noted that his office “has been seeking ways to streamline its audit activities so that even with limited resources it can still carry out its mandate”.
    This included “greater use of information technology in the audit process and a more risk-based approach on areas selected for audit”.


    Source: Nation

    Like

  • ‘Government’ could find the resources to establish and fund an unnecessary ‘Public Affairs Department’……

    …… but cannot fulfill the Auditor General’s requests for additional staff.

    Like

  • David

    Am I “excited by the talk?”

    Far from it, my friend.

    The manner in which regional governments have dealt with issues concerning LIAT, UWI, CARICOM, regional integration, West Indies cricket…… and how they allow the US government to manipulate regional unity, by ‘picking and choosing’ which Caribbean leaders with whom they want to meet, rather than remaining united……

    ……. do not inspire excitement or confidence.

    Like

  • David

    I found this article in the Antigua ‘Observer’ very interesting.

    “New plans drawn up for LIAT expansion – including making all destinations serviced buy shares.”

    7 July 2022

    “New expansion plans for LIAT have been proposed, to build on the optimism of a small operating profit recorded over the past 20 months.”

    By Orville Williams

    Efforts to save and revitalise the embattled LIAT could get a massive boost within months, as new plans for the airline’s expansion are drawn up.

    This week’s post-Cabinet report revealed that three officials from the carrier’s administrative office were present at the weekly Cabinet meeting on Wednesday, with a proposal that includes several operational changes that could be realised in six months’ time.

    Among the proposed adjustments is that “any destination requiring more flights than has been deemed necessary would make a special payment to realise its ambition”.

    A minimum revenue guarantee would be applied in order to determine what that cost would be, the notes added.

    That change could be read as a direct response to reports of some countries requesting and benefitting from largely unprofitable routes, to the detriment of the carrier’s finances.

    Information Minister Melford Nicholas confirmed that presumption, while noting that it is not an uncommon practice within the region.

    “In the past, many states would have required and demanded certain flight schedules that made it uneconomic. I think, in this new arrangement, they will be proposing a minimal number of flight operations.”

    “And where member states would want to go beyond that, then they will be asked to supplement that operation with minimum rates guaranteed – much like the North American carriers would have done in the Caribbean,” Nicholas explained.

    In the proposed ‘new LIAT’ as well, “salaries, wages and other emoluments will take up a smaller part of its cost of operations” and it is likely the carrier will continue to operate with a reduced fleet – three aircraft are being utilised currently, compared to 10 aircraft prior to its collapse.

    In the proposed ‘new LIAT’ as well, “salaries, wages and other emoluments will take up a smaller part of its cost of operations” and it is likely the carrier will continue to operate with a reduced fleet – three aircraft are being utilised currently, compared to 10 aircraft prior to its collapse.

    Another forthcoming adjustment, according to the report, is expanding the responsibilities to LIAT, as well as the rewards from the carrier to include all benefitting countries.

    “Every territory to which LIAT flies will be asked to purchase shares so that the burdens and the benefits can be equitably shared,” the report stated.

    That for certain is an example of ‘learning from your mistakes’, as LIAT’s current shareholder governments continue to debate the future of the airline, and their financial obligations to former staff who were severed when the airline ceased operations back in 2020.

    While the airline remains in administration at this point, it is operating on a small scale with only a fraction of the routes and active staff compared to its heyday. But despite those limitations, the report revealed that “the revenue earned by LIAT over these past 20 months shows a small operating profit”.

    It was reported in 2018 that the carrier had only previously made a profit once in its decades-long history – in 2009.

    This latest profit has bolstered the government’s optimism about LIAT’s future and is spurring the much-touted expansion.

    “The 139 staff that are [at] LIAT as well, they have asked for an increased number of staff to be able to cope with the growing demand that they’re seeing.

    “I think, based on those discussions, we are satisfied that LIAT 2020 has a very good potential of rising from the ashes of LIAT 1974 Ltd, meeting and going beyond the expectations that currently exist for intraregional travel,” Nicholas said.

    The Information Minister reiterated that there remains suppressed demand for air travel services across the sub-region and he asserted that this demand could encourage investment from other Caribbean countries.

    Like

  • David

    Seems as though the government of Antigua & Barbuda is taking the lead in formulating plans for the revitalization of LIAT.

    Remember, in December 2020, Browne accused Mottley and Gonsalves of “discriminating against LIAT” and engaging in a ‘deliberate effort to undermine the work ahead to have a successful return of the regional carrier.’

    In March 2021, during a radio broadcast, he told listeners that the ‘former Barbados-based LIAT pilots are rotten elements responsible for the demise of the carrier.’
    “You see those very pilots, especially those in Barbados, I’m told that they are some rotten elements, and one of the reasons why LIAT collapsed is not so much because of COVID you know, it’s because of the behaviour of them rotten elements within LIAT…”

    Browne is prepared to blamed everyone, except himself, for the demise of LIAT.

    Now, it appears as though the underlying expectation is that, those three PMs should ‘kiss and make up,’ in the interest regional travel.

    But, lessons should also be learnt from what occurred under Antigua’s Prime Minister Gaston Browne and the Antiguan Court appointed administrator, Cleveland Seaforth, especially as it relates to amending the law thereby preventing former LIAT employees from filing civil suits against the airline or the Antiguan government for severance payments due to them.

    Like

  • @Artax

    Under 1974 wasn’t the contribution to the financial plan now proposed also tabled to which St. Lucia and others refused.

    Maybe it was they objected to 1974 debt burden? It seems a little unethical for Caricom to be looking to float a new airline with so many lose ends shrouding 1974.

    Like

  • Further, LIAT all will agree was grossly mismanaged with Antigua government a big contributor. A new airline with LIAT in the lead is madness.

    Like

  • David

    Especially with Gaston Browne at the ‘spearhead.’

    Browne believes LIAT belongs to Antigua, but knows the island is not in a position to fully finance its operations.

    So, talk about difficulties people are experiencing with regional travel, in addition to very few airline options…… to build a case for the revitalization of LIAT……

    …… an airline based in Antigua, managed and operated by personnel chosen by the Antiguan government….. with operations financed and airfares subsidised by regional taxpayers.

    ‘Sounds’ like a good plan.

    Like

  • $6 MILLION HOLE
    AUDITOR GENERAL WANTS URGENT PROBE INTO BRA COLLECTION DISCREPANCIES
    Auditor General Leigh Trotman has chastised the Barbados Revenue Authority (BRA) for failing to do spot checks at its cash collection points across the island, as required by law, and identified discrepancies amounting to millions of dollars for which no explanations have yet been given.
    In his latest report covering the year ended March 31, 2021, Trotman called for investigations and swift action to address the inconsistencies.
    The Government’s auditor, whose position is legally protected from political interference, raised specific questions about a more than $6 million difference between what the cashier’s report at one BRA collection point stated and what the Central Bank indicated was collected.
    According to that September 22, 2020 cashier report for the Treasury Office in Bridge Street Mall, Bridgetown, cheques totalling $10.19 million were collected. However, there was a massive $6.62 million difference between that report and what the Central Bank listed as the amount received.
    Trotman said the agency’s reported cheque amount “did not agree to the Central Bank listing which recorded $3,536,006.77, resulting in a difference of $6,662,541.31”.
    He, therefore, called for swift action, adding: “No explanation was presented for this significant difference which should be investigated as a matter of urgency.”
    Addressing the specific issue of surprise cash inspections, the Office of the Auditor General said it was not provided with any evidence to suggest that cash points were inspected during the review period.
    He said he was less than pleased with this state of affairs at a revenue collecting agency that raked in more than $1.5 billion on behalf of the country.
    “No documentation was presented to verify that cash inspections were carried out for the financial year ended 31 March 2021 as required by Financial Rule 116. With revenue collections of over $1.5 billion, the Authority should ensure that this control procedure is carried out, thereby ensuring that the funds collected on behalf of the Government are safeguarded and accurately recorded,” Trotman said.
    In response, the BRA blamed the situation on “restricted movement across locations as a result of COVID-19” which it said, “impacted this process”.
    The Auditor General also lashed the agency for its failure to submit financial statements on time.
    He said the Public Finance Management Act 2019-1 Section 88 mandated that financial statements be submitted by collectors of revenue, such as the BRA, to the Auditor General and the Accountant General within two months after the close of each financial year.
    He said the BRA had not complied with the requirement to also include information on receipts, revenue, refunds, waivers, remittances and receivables.
    Trotman said the financial statement was submitted some seven months after the specified period, and his office had not yet received statements on the waivers that BRA granted, or remittances for the period.
    He went further to describe what his office regarded as “major discrepancies, errors, and omissions related to receivables”. These included contradicting Value Added tax (VAT) receivable balances, with an $84.86 million difference between what was stated as VAT receivable and the receivables schedule.
    “As a result, the VAT receivable could not be verified,” Trotman stated in his Auditor General’s Report which was submitted to Parliament on July 1, 2022.
    In response, the BRA wrote: “This matter will be investigated.” (IMC1)

    Like

  • NorthernObserver

    @ac
    Nice.
    What about the REAL money items in the Report?
    The multiple government agencies where the AudG has nothing to audit because they are now 5-10 years behind.
    Clearwater Bay where they found evidence in the land registry the land (4 Seasons) had been sold, BUT there was no corresponding record of RECEIVING any payment. (Pharliciple?)
    The School Meals project begun in 2010 for 2012 completion is still not finished, and will now cost taxpayers an added +/- $6M
    On and on as per usual

    Like

  • She wouldn’t care that financial mismanagement and seemingly malfeasance is a brought forward.

    Like

  • In case you were away for a few years, here is all you need to know
    Conversation 1,
    Poopy pants
    Who are you calling poopy pants. You pooped your pants too.
    But I pooped my pants before 2018. My pants dry your pants is still wet. Poopy pants
    Who are you calling poopy pants. You pooped your pants too.

    Conversation 2.
    Boy we are facing some real problems
    Not only we. The UK, US, France Germany, they all have problems.
    Boy the crime about here really scaring me.
    There is crime all over the world, even in the USA.
    And some people are not getting an adequate daily water supply
    it could be worse. I know they don’t want to be in Flint, Michigan
    Man, what about our rising debt.
    Imagine you talking about debt when Japan has much more debt than we.
    Japan, UK, USA, France Germany. Are you certain we are in that weight class. You have a plaster for every sore.
    Talking about sores. Monkey Pox! We don’t have that here. Go check out the UK

    How many times can we have the same conversation and act as if it is a new conversation?

    Like

  • NorthernObserverJuly 9, 2022 10:54 AM

    @ac
    Nice.
    What about the REAL money items in the Report?

    Xxxxcc
    Why is Mia Red bag no where to be found in this investigation

    Like

  • DavidJuly 9, 2022 10:57 AM

    She wouldn’t care that financial mismanagement and seemingly malfeasance is a brought forward.
    Xxxxxx
    Shouldn’t 60-0 at least make a difference ?
    Asking for a friend

    Like

  • Now if you want to talk about punching above their weight…
    AC…
    I like how this woman takes on all comers, sometimes 3 or 4 at a time. Where a brave man would hesitate, she pushes on.
    Can you image the size of her heart? Wow!
    I wonder if it is just blood that runs in her veins. Perhaps, it is some strange mixture of fire, iron and the stuff that one finds in the veins of superheroes.

    Now, I am not saying that she is perfect. I know that she has made some mistakes in the past but when one is attacked by several opponents at the same time and attempts to fight back, then a few punches may be misguided.

    You go, girl . (back on board the ac train)

    Like

  • It should make a difference with opposition voices seeing a need to step up to fill the vacuum.

    Like

  • DavidJuly 9, 2022 12:30 PM

    It should make a difference with opposition voices seeing a need to step up to fill the vacuum
    Xxxx
    According to the voice of the PM she said her party can become the voice of the opposition and fill the vacuum
    Haven’t you heard
    Isn’t 60- 0 enough

    Like

  • Ok, then no need for the DLP. We got this.

    Like

  • Face it David
    It is not so much that there is no need for the DLP ….as it is that the DLP is even more clueless than the damn BLP.

    Angela c has come to accept this REALITY, even as she persists with the party shiite-spin like the faithful yard fowl that she is.
    (Three is more under that weave than itch, David….just no brain…)

    ac KNOWS that the very worse thing that could happen to the DLP now, would be to regain power… they would just make Wilfred look palatable.
    So ac’s game is to ‘snipe’ and seek to remind us that the BLP just as bad as the DLP was…

    Which brings us to YOUR problem…. Mr ‘we can find a way’ David

    Here is what you have….
    DLP hopeless
    BLP just as clueless- (just more cuntsultants and ministers)
    Atherley / Caswell gone fishing
    Economy busted
    Tourism gone
    Sugar dead
    Agriculture buried
    Prices gone UP ….with seats and moving…
    Wages stuck at 2014….

    who YOU GONNA call…????
    brass busters….???

    Like

  • @Bushie

    History has taught us leaders emerge even if we are unsure of the timing.

    And when hope is at its lowest there is the fable of a phoenix rising from the ashes.

    Like

  • Boss
    You may need to extend your ‘history’ sources…

    The problem with ‘history’ is that it usually ONLY ‘exists’ for those who managed to survive to write it….
    The HOARDS of brass bowls who disappeared from existence through idiocy, have no stories of any phoenix, only of ashes and regrets.

    It is why we know so little about Pacha’s ‘ancients’ who allowed themselves to be decimated via brassbowlery….
    and so much about the albino-centrics who we have been facilitating, supporting and blindly worshiping, ever since…

    Like

  • DavidJuly 9, 2022 1:09 PM

    Ok, then no need for the DLP. We got this

    Xxxcc
    Then keep it in yuh back pocket and see what the voters decide
    Next election
    IMF or DLP

    Like

  • @ Bush Tea

    Page 10 of BarbadosToday online. Celebrating Canada. A deputy essential to the visual acuity of real men. lol

    Like

  • NorthernObserver

    @ac
    Fully agree, maybe the red bag was just smoke and mirrors?
    It obviously had in nothing about Pornville? Nor anybody or anything else. Just a red hot air bag.

    Like

  • NorthernObserverJuly 9, 2022 4:50 PM

    @ac
    Fully agree, maybe the red bag was just smoke and mirrors?
    It obviously had in nothing about Pornville? Nor anybody or anything else. Just a red hot air bag.

    Ccccccc

    But get this
    This bag might be even bigger after all 6 million smackeroos missing
    After all.porniville was a measley 15 thousand in chump change
    6 million a whole lot of goodies lurking in that red bag to be found
    Maybe u can help the PM in the lost and found dept

    Like

  • NorthernObserver

    Lol…you conveniently forgot Clearwater Bay was $124,000,000, that’s 40x larger. Plus Pharliciple paid (US$36M) $72M and they can’t find the money!!!
    But see I look at it from a taxpayer/investor viewpoint, I don’t care B or D, cause to me the only difference is whether you or Lorenzo is happy. The results otherwise are similar.

    So the BRA issue is serious, just another in a long, long line.

    Like

  • NorthernObserver

    And for the record, Pornville was $0. That was private company footing the bill. The same company was sold, to a ferner who promptly saw profits increase bigly. But he knew the solution, all you have to do is stop de teefing and financial abuse.

    Like

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