Prime Minister Freundel Stuart today met with his controversial Minister of Agriculture Dr David Estwick against the backdrop of failed efforts by Estwick to present alternative fiscal measures to the full Cabinet yesterday.
Up to the publication, the outcome of that meeting could not be ascertained. However, new details were emerging of the economic strategy that Estwick wants his Government to pursue to effectively wipe out this country’s total national debt as well as new loan payments for another 30 years.
In letters addressed to the Prime Minister and dated January 13, 2014, the Minister of Agriculture and former Minister of Economic Affairs, appealed to Stuart to take up an offer from the oil-rich Arabs to restore this country to economic growth.
Estwick also told his boss that the United Arab Emirates were interested in helping Barbados re-establish its investment grade rating and ensuring that it returns to a path of debt sustainability.
He further informed Stuart that the government of the UAE met early last month and expressed “very keen” interest in working with Barbados towards restoring growth.
“Over the past two weeks, I have been engaging the Government of the UAE through their special envoy . . . regarding the UAE helping Barbados to accelerate its growth programme and correct the instability in the macro economy by correcting the fiscal deficit and the debt problem of Barbados,” wrote Estwick in his correspondence to the Prime Minister, a copy of which has been obtained by this newspaper.
He told Stuart, too, that as chairman of the Cabinet Committee on Infrastructure responsible for project oversight and management, he thought it necessary to look to sovereign wealth funds and private equity funds for access to low interest capital.
The former Minister of Economic Affairs advised Prime Minister Stuart that the traditional use of the International Monetary Fund, World Bank and Inter-American Development Bank as sources of fiscal and debt support and development capital, caused governments to rely too much on the Bretton Woods institutions model of assistance.
The outspoken senior Government minister suggested to Stuart that if his administration was serious about accepting the Arabs’ offer of low interest loan, the Arabs have requested that the prime minister personally invite a delegation to Barbados for further discussion and engagement.
“What the Abu Dhabi and UAE governments propose to do, is to establish a sinking fund to retire the national loans when they become due. They have proposed a US$4 billion fund at a fixed interest rate of two to four per cent, over a 30 year period. These terms are negotiable,” the Minister of Agriculture’s letter stated.
Estwick informed the prime minister that this was a one-time opportunity and as a result, he thought the government should negotiate such a fund to wipe out the entire national debt of US$5 billion.
“If you compress all of the loans together and create one sinking fund, when loan payments are due on the various loans, they are paid from the single collective sinking fund and not from current revenue,” observed the Cabinet member.
His letter to Stuart argued that if this country was successful in negotiating the sinking fund to cover the entire national debt, the governments of the UAE and Abu Dhabi would deposit in a fund in a mutually agreed location with the Government of Barbados, US$5 billion.
In listing the benefits to Barbados, Estwick wrote that this deposit, being in US currency, would solve this island’s foreign exchange issues, the sinking fund would become a certificate of deposit in a bank, it would be considered a second tier reserve, there would be no new loans for 30 years, and Barbados would pay one debt payment and that would be on the newly established sinking fund.
It is not clear how the Prime Minister reacted to this proposal but a senior member of his team today poured cold water on the reported offer, saying “no one is going to lift up their robes and pull out [US] 5 billion for Barbados without conditions”.
The Government official also downplayed reports that Estwick was being ignored by the Prime Minister and certain members of Cabinet, saying “if Estwick wants to be heard he can be heard”.
He added that other forces appeared to be at work.