“DEAL OR NO DEAL”?
That vital question may be the title of a popular American television game show in which contestants often win tens or hundreds of thousands of dollars. But for the University of the West Indies (UWI) in Barbados, Jamaica and Trinidad and Tobago and for its new Vice Chancellor, Professor Sir Hillary Beckles, the question and answer may hold the key to a sound financial future for the region’s leading tertiary educational institution.
Owed almost half a billion dollars, $400 million to be exact, by governments of its member countries, the UWI wants, certainly in the case of the Barbados Government, to hear from Minister of Finance Chris Sinckler, or Prime Minister Freundel Stuart, or both, if they can have a deal that would wipe out or significantly slash the $200 million debt with an injection of cash.
“We know that Barbados has its own cash flow situation and its debt profile to deal with but we are trying to find ways to help resolve the financial issue,” Sir Hilary told BARBADOS BUSINESS AUTHORITY during a recent visit to New York.
“There are mechanisms to resolve it and all you need is an agreement. There are ways in which you can approach a debt.”
With a mountain of national debt which international financial institutions insist is at least 100 per cent of the gross domestic product and with the National Insurance Scheme already holding enormous amounts of Government paper, the Stuart administration should bite the proverbial bullet by considering a plan that, if accepted, would allow the university debt to be transferred or sold to a bank, insurance company or other private commercial institutions. The Government would then repay the new owners of the debt over time, say about 20 years, at a mutually agreed interest rate.
“We have been trying to put those kinds of possibilities to the Barbados Government,” said Sir Hilary. The trouble is an agreement remains elusive.
According to well-placed sources, at least two commercial enterprises have expressed an interest in buying Barbados’ UWI debt but the Government is yet to answer the question: deal or no deal?
In the meantime, though, the UWI is trying to confront its financial woes, caused by the arrears and by efforts to satisfy the region’s galloping demands for more highly trained graduates. But the inability or unwillingness or both of the member countries, Barbados among them, to pay up has become a financial albatross around the UWI’s neck.
“We have not had any movement in terms of the total indebtedness of Barbados to the university,” said Sir Hilary. “In fact, it continues to increase. It has been steadily rising over the past seven or eight years. In that time, it has become an enormous challenge. We continue to speak with our governments. My predecessor, Professor Nigel Harris, spent an enormous amount of time on this subject. The Chancellor, Sir George Alleyne, has had extensive consultations on it.”
Considering that the issue of the monstrous debt is frequently discussed by the university’s finance committee, which meets about three times a year, and it is routinely on the university council’s agenda, it’s clear that the depth of the problem hasn’t escaped those responsible for solving it. But what terrifies Sir Hilary, Sir George, Professor Eudine Barriteau, the new principal of the Cave Hill campus and other administrators, is that the university’s auditors may someday issue a qualified audit that would raise fundamental questions about the UWI’s long term financial viability.
Indeed, the auditors have reportedly expressed their anxiety over the hard fact that the indebtedness, “the receivables,” are seemingly sitting permanently on the UWI’s balance sheet and are not declining.
Indeed, some senior UWI officials privately admit that the unhealthy financial picture is causing them to have sleepless nights, as they worry about how to nudge governments to meet their obligations at a time when the governments themselves are insisting that the UWI must do more, much more to train young people.
Asked about the proposed debt-for-cash deal Charlie Skeete, a retired senior economic adviser at the Inter-American Development Bank, said that without the details of the proposal, especially the interest rate for any repayment plan, he couldn’t respond meaningfully to the suggestion. In short, the devil would be in the details.
Still, there are some things we know about the UWI. At the top of the list is that it’s an excellent school which has played a major role in catapulting the region’s economic and social development picture to heights that were once considered unattainable.
Secondly, it is has trained more of the Caribbean’s public and private sector leaders than most tertiary institutions in emerging economies have done in the past 40-50 years. Interestingly, that’s at the core of the Barbados-UWI story.
Thirdly, it adds value to taxpayers’ investment in university classrooms, science laboratories and other academic and technical areas.
Next, the UWI remains a highly accredited school but that academic stamp of approval could be jeopardised if some facilities, for instance, the library complex at Cave Hill, fail to meet 21st century university requirements.
It’s also clear that the region’s private sector has extended a vital helping hand to the UWI.
“The private sector in Barbados, Jamaica and Trinidad and Tobago, for instance, has been enormously helpful and generous,” said Sir Hilary.
That’s true. Just look around Cave Hill and the presence of the private sector would become clear. Sagicor, the Barbados and Caribbean insurance and investment corporation, is a clear example of corporate generosity to the UWI.
