The excessive NATIONAL debt has been incurred because of ignorance (not knowing). We therefore cannot expect the same people to pull us out.
We are now unable to enter a debate on education, health and a slew of related issues that grow by the minute. Uncle Bobby says education will never again be free.
Prime Minister Keith Mitchell of Grenada is looking at begging the international lenders for 50 per cent forgiveness so that his government can have space and begin national reconstruction, otherwise his problems will worsen.
Good luck. (Is the United States looking after its underbelly? It is rumoured that from Trinidad 50 fighters have left to join ISIS. Who are they?)
Barbados, on the other hand, recently touted as punching above its weight, faces a different problem. Having entered debt arrangements with seemingly international vultures (high interest rates), it is not likely to get reprieve from their pound of flesh. In any case, its debt structure is skewered, on Central Bank’s advice, towards local debt.
If we are going to beg for mercy, we have to beg the local market. If the Government can get a reprieve, then its more palatable debt structure will put it in a position to better access international markets to support identified investment opportunities, start reconstruction, ensure wages and employment and promote growth and taxes.
The question is how to reduce local debt.
Right now our dollar is devaluing as the US dollar strengthens and as we have to pay more for everything. We become less competitive. Our hotel sector ceases to attract as before and is embroiled in an argument with the ministers of finance and agriculture about an MOU that Sandals never had to sign. (The argument really is that the ministries cannot afford to forgo the taxes.
Also, you cannot expect a company that represents a brand to give you a salt bread and a piece of ham, when you allowed it into the island knowing that its brand presentation is otherwise. So your first mistake was to have allowed that company to enter the island with its expectations. You are now compounding your error by insisting that it cannot import its ingredients that your country is unable to supply).
Our devaluation and the present stalemate are depreciating the purchasing power of the $8.9 billion savings hoarded in the banks. We then have two problems. One, a big local debt, and two, a big savings in the commercial banks. How to make them kiss?
We need a catastrophic change in mindset. They cannot be lovers and survive politically. So the interest of Barbados has to come first. In any case, members of Parliament would have qualified for pension by 2016 – eight years minimum.
If Government arbitrarily reduces bonds, treasury bills and loans debts, there will be a howl of protests and a loss of confidence (perhaps for a while), but the country’s debt would have been reduced and space created to ensure investment and growth. Who will trust the Government then with their money? It is a dilemma.
The Government of Barbados will pussyfoot until February 2018 without the testosterone fortitude to make an unpopular decision. We will have no growth. Employment will suffer and taxes will diminish.
We will not put to use the 4 000 sent home workers to boost our import substitution of food. Instead 6 000 will seek jobs from Sandals.
Reminds the Wild Coot of the “charge of the Light Brigade” – into the valley of death rode the Cabinet – could be Bajan false pride.
The funny thing is that the high-flyers that now prosper on the backs of citizens will also have their problems. They exacerbate the situation now by exportation of profits. The more foreign ownership we have, the more US dollars are exported in dividends – for a while.
The kiss between the local debt and the $8.9 billion saved has to be passionate, like those we see on television by the stars. Deep throat!
“Wild Coot, you have not fully explained what to do. Yuh mean yuh gine lef we so?!”
• Harry Russell is a banker.