Debt swap does not mean debt relief.
First it was Ryan Straight singing the benefits of Barbados entering a debt swap arrangement with CIBC FirstCaribbean and Credit Suisse International. It was reported both institutions agreed to the government of Barbados buying back BDS$150 million each. The mechanics of the deal: savings generated from rebooking the debt at a lower rate will be used to finance government’s marine conservation plans.
See related article – Debt swap
Next it was Prime Minister Mia Mottley last week announcing another debt swap worth BBD$600 million to be utilised to finance the upgrade of the controversial South Coast Treatment plant (SCTP). The financial agencies mentioned with the deal were the Inter-American Development Bank, the European Investment Bank, and the Green Climate Fund.
In both cases there should be no criticism about the need for government to allocate resources to upgrade the SCTP and marine environment. Barbados is a small island developing state that is heavily dependent on a pristine environment to maintain its character. The country is beginning to take on a haphazard appearance with the high volume of vehicles on the road, photovoltaic panels littering our fields and hills, houses being planted everywhere, itinerant vending everywhere, et cetera.
We are doing this without increasing a cent in debt. But that is because we have built credibility in being able to discuss the climate issues and to show that water scarcity was already a problem before the climate crisis really started to be exacerbated for us.Prime Minister Mia Mottley
I want to say to Barbadians today that this new deal, this Bajan deal, will not cost them a cent. It will not cost their children a cent, it will not cost their children’s children a cent.Minister Adrian Forde
This will not impact the budget of the Ministry of Environment.Minister Ryan Straughn
Government talking heads should know we – the members of the public – have received the memo, which is, the debt swap will not add to the heavy national debt – players involved have leveraged current low interest rates to ‘refinance’ debt booked at higher interest rates to free up dollars for needed projects. What the blogmaster prefers is for the full details of the arrangements to be made public.
Early this year Barbadians were blindsided by the news an additional $150 million dollars in interest cost was added to Barbados’ foreign debt. The Mottley government had informed Barbadians- like it is doing today re debt swaps- the advantage of capitalising on borrowing at low interest rates. However, it was subsequently revealed there was a variable interest rate clause included in the agreement with lenders. As a result, Barbados will continue to incur interest cost on the significant debt borrowed by the government because interest rates have been rising.
This is why all loan agreements engaged by government should be shared with the public in the interest of transparency and to afford the opportunity for our best intellect to be available to government to assist with vetting. There is a high level of apathy, cynicism and distrust by the public directed at government and politicians. Barbadians must exert greater focus on decisions being taken in various high rise offices in Washington that mortgage our future.
The blogmaster understands that Mottley has been riding a climate change narrative on the global stage, to the extent her name is being mentioned as a front runner for the job of Secretary General of the United Nations in 2026. What cannot be refuted when the pretty talk is dispense with with – a debt swap does not mean debt relief.