Barbados Prime Minister Mia Mottley, dismissing concern that the island is in a precarious debt situation, has brushed aside suggestions that the country will not be able to fulfil its obligation and repay a seven-year loan from the International Monetary Fund (IMF).
She has dismissed her critics as saying that they were seeking to excite Barbadians and speaking without context as it regards the BDS$928 million (One BDS$=US$0.50 cents) to be repaid by 2029.
Mottley was speaking at the book launch of Sir Alister McIntyre’s compilation of works entitled “Caribbean Trade, Integration And Development” at the Errol Barrow Centre for Creative Imagination (EBCCI). The Grenada-born Caribbean economist specializes in development issues and is a defender of regional economics and is regarded as one of the highly celebrated West Indian academic and intellectuals.
“More and more as I read sometimes in the newspapers, I wonder if people have lost perspective and have lost context. For to hear that BDS$900 million from an IMF program is something that will cripple a country when that constitutes a mere 6.4 percent of its debt and at no stage would garnish more than four percent of the revenues in servicing the debt, tells me that the figure has been used to excite persons without context,” Mottley said.
Earlier this week, senior economist Anthony Wood told the online publication, Barbados TODAY that he had reservations about the island’s ability to repay the debt.
“Without appropriate economic and financial policies over the short and medium-term to return Barbados to a sustained growth path, with tourism and other foreign exchange-generating activities yielding very good results, the country’s ability to service the IMF and other external loans will be seriously compromised,” said Wood.
Wood, who once served in the cabinet of late former prime minister Owen Arthur, said the government’s senior economic adviser, Dr. Kevin Greenidge, the IMF and the United States Treasury Department, were optimistic that Barbados will be able to service the debt in full within the stipulated repayment period.
He noted also that Dr Michael Howard, a retired Professor of Economics and specialist in Public Finance, had serious reservations about Barbados’ ability to repay the IMF loan based on the current economic trajectory of the Mottley administration.
“Professor Howard’s contention must be taken seriously given what has transpired since the administration was able to reduce the national debt from around 17.1 billion dollars to just under 12 billion dollars (and the debt to GDP from 171 percent to just under 120 percent) in late 2018 when the debt restructuring/repudiation program was concluded.
“We should be reminded that domestic debt holders (National Insurance Fund, Central Bank of Barbados, Private Financial Institutions and individuals) suffered in a disproportionate manner compared to external debt holders when the administration repudiated (refused to pay) about 4.5 billion dollars of the 17.1 billion dollars in debt.”
But while she did not name any person in particular, Prime Minister Mottley told the ceremony on Thursday night that if the situation was placed in context “you would realize that amount is not only one of the smallest amounts, but that the capacity to service the debt is more than manageable”.
She sought to explain the rationale behind the IMF loan under the Barbados Economic Recovery and Transformation (BERT) program, noting that the debt incurred helped to prop up the island’s social system during the height of the coronavirus (COVID-19) pandemic.
“If you look at it from the perspective that the debt was used to be able to secure from buses to transport people home near and far, to garbage trucks, to equipment to deal with roads, to a whole range of things, then you have context and perspective,” she said, noting that the region was involved in a “relay race of development”, and that the work of Sir Alister was as relevant today as it was several decades ago.
On October 1, 2018, the IMF announced it had approved an Extended Arrangement under the Extended Fund Facility (EFF) for Barbados for an amount of US$290 million that is due to end this September. The EFF-supported program aims to help Barbados: restore debt sustainability, strengthen the external position, and improve growth prospects.
Bridgetown has already indicated that it will decide later as to whether or not to enter into a new agreement with the Washington-based financial institution.
“We are going to have discussions with the Fund and we will make the decisions in the next few weeks,” Mottley said earlier this month as the IMF managing director, Kristalina Georgevia, paid a four-day visit to the island.
CMC/
