THIS WEEK’S CALL by Independent Senator Geoffrey Cave for a serious look at Barbados’ national debt should not be taken lightly.
Against the backdrop of two international agency downgrades, Barbados, according to Cave, has borrowed about $6 billion within the last six years.
This, compared to about $4 billion over the space of the other 40 years of Independence, gives cause for this very timely caution that coincides with evidence of continued wastage in the public sector, the threat of local brand-name hotel Almond Resorts Inc. going under – thereby losing close to 50 000 visitors yearly and over 500 jobs – and a string of financial issues hanging over Barbados’ head, including the Al Barrack settlement of more than $70 million and CLICO International Life, whose liability is $350 million-plus.
The veteran businessman warned during the Senate debate on the Appropriation Bill 2012-2013 last Tuesday that expense levels in the country were too high and that, having himself faced success and failure in business, it was vital to “do things the right way”.
It was also noteworthy that he referred to a frightening debt swap recently instituted in neighbouring St Kitts and Nevis by the International Monetary Fund. He noted that those funding the debt operated under a structure not unlike our National Insurance Scheme, which means this “swap” could have implications for pensioners and other vulnerable people over time.
Cave also said he had warned Almond Resorts Inc. about its own high debt after the hotel, in its quest for quick expansion, had purchased the old Casuarina on the South Coast and the Morgan Bay, St Lucia property.
As a longstanding director there, he said the result of Almond’s high debt issue, even after millions were pumped into it by Trinidadian parent company, Neal & Massy, is now well known.
The Independent senator’s comment on that issue was equally instructive, as he recalled his concern that a hurricane could have struck Barbados and that Almond Resorts Inc., with its high debt load, could have gone under.
“The hurricane was in fact the recession and that was worse than a physical hurricane,” he told the Senate.
With the life-sustaining artery of Barbados’ No. 1 foreign exchange earner being blocked from two points – low visitor spend despite high arrivals and the projected decline in cruise arrivals – one is left to wonder whether any other forecast but a gloomy one would be realistic.
We’ve been informed that Cave has met with Prime Minister Freundel Stuart, who has since held a full meeting of the Social Partnership.
This is encouraging, but in an election year it may be a stretch to expect that Government will move to deal with this matter of debt in any real hurry.
We would urge Stuart and Minister of Finance Chris Sinckler to carefully consider the national debt and look at curbing expenses as soon as possible, even at the expense of critical general election votes.