IT IS TIME that the Minister of Finance stop treating the management of the Barbados economy as a political game, with the ultimate goal of finding the “Big Lie”.
Sometime ago whilst overseas for a few weeks, I was accused of being part of a group of four meeting at the University of the West Indies to send home 10 000 public sector workers. Ironically, the minister was already crafting a privatisation programme that he subsequently denied with the concurrence of Prime Minister Freundel Stuart.
This time around, the same minister, true to form, is constructing an argument by default to implicate the Opposition Leader in his failure to pay the entire first amortisation payment due on the Credit Suisse loan on June 18, 2015, in accordance with the terms and conditions of the loan approved by Parliament.
In an effort to cover the failure, Minister Chris Sinckler stated: “Across all administrations in Barbados, irrespective of political persuasion, we have all successfully ensured that as a country we meet all our debt commitments on time and in full. It is an enviable record and one which we must work to maintain.”
Of course, he would have been unaware that as far back as September 2011, the leadership of the Barbados Labour Party was in possession of a Central Bank of Barbados board paper – Ref. No. 8/2011/5(c) – which showed that the Government was having severe difficulty in financing its fiscal deficit at the time. It was noted: “For the first five months of the fiscal year [2011-12], the fiscal outturn has improved as on-budget expenditure fell by some $84 million and revenue rose by close to $105 million when compared to the corresponding period of 2010. Despite these gains, Government has been unable to make some payments on schedule.”
It is clear that the current Democratic Labour Party administration did not meet all of its payments “on time and in full” at that time, according to the board paper. Furthermore, these payments must have included domestic debt commitments.
Given that this information was known to the leadership of the Barbados Labour Party for the past four years, the responsibility and maturity of the Opposition is absolutely clear. The party’s silence on this matter reflected a serious concern that the revelation of such information could have compromised the country’s previously stellar record in meeting its financial obligations.
It is again true to form that the Minister of Finance introduced the word “defaulted” into the public discourse on the Credit Suisse loan, when genuine concerns were raised about the failure to pay the amount owed “in full” on the loan at June 18, 2015.
According to the terms and conditions approved by the House of Assembly, the sum of up to US$225 million (BDS$450 million) could be borrowed from Credit Suisse AG Cayman Islands – and it was. The principal repayment is to be done in eight semi-annual amortisations commencing 18 months after financial close, which was in December 2013. Therefore the first repayment on principal was due on June 18, 2015, in an amount of $56.25 million.
Based on the above conditions, the following payments should have been made:
(BDS$)
Interest Principal
Payments Payments
June 2014 $15.481 million* $0 million
December 2014 $19.89m* $0m
June 2015 $20.6m $56.250m
Total $55.871m* $56.250m
* – Estimate
As noted in the table, the first principal payment was to be $56.25 million. The question is: why did the Government pay only $20.63 million? The answer is: the payment commitments would have weakened the foreign reserves even more at the end of June 2015. One of the reasons for the Credit Suisse loan was to build the country’s foreign reserves, which have declined by $175.9 million since the loan was acquired.
The next question is: did the interest rate on the loan increase? If so, what is it? Is the increase because of the refinancing and/or the downgrading of the country’s credit rating in 2014?
There is nothing which has done more damage to the Barbados economy than the policies of Minister of Finance Sinckler and the Freundel Stuart-led administration in the post-Independence period.
The good name of Barbados will be better served if the Government shares the true information on the economy with the Parliament and the people.
The Minister of Finance must stop repeatedly treating the public like this and, in so doing, worsening investor confidence in Barbados. Barbadians need answers to the critical issues that affect their existence and livelihoods.
• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party adviser on the economy. Email mascoll_clyde@hotmail.com
