It will be political “perversion of the highest order” if the Central Bank of Barbados and the National Insurance Scheme were to be asked to pick up most of the Government paper placed on the local financial market following the increase of the limit of Government borrowing to $4 billion.
Opposition Senator Wilfred Abrahams issued this caution today in the Senate while speaking on a resolution to approve the $4 billion as the amount to be raised by the issue of Treasury Bills, tax reserve certificates and tax refund certificates for the purpose of paying off at maturity bills already issued and outstanding.
In issuing the word of caution to Government, Abrahams said: “For the last six years, and this is a fact, the Government has not been paying its bills to the National Insurance Scheme. It has not been paying the NIS for occupying its properties; it has not been paying contributions for public servants and it has not been honouring its debts to the NIS.
“If the Government has to borrow domestically, then it has to borrow domestically, but from whom? My simple point is that if the Government can get the commercial banks to pick up these Treasury Bills, then fine.
“If Government can get private entities and corporate Barbados to pick up the Treasury Bills, then that is fine. I am saying that it would be perverse of this Government and an act of utter perversion where it is as indebted to the NIS and not honouring its current obligations to get the NIS to pick up any of these Treasury Bills that would be available when they are issued.
“I am saying it also goes for the Central Bank of Barbados because the Govenor of the Central bank is saying the bank is operating at a loss. I am saying that the Central Bank should not be forced to pick up Government’s Treasury Bills in situations where the commercial banks would not do it. It makes no business sense.
“At the end of 2007, the NIS held $1.44 billion in Treasury Bills. In March this year, the NIS held $2.88 billion in Treasury Bills. Over the last six years, the NIS exposure to Treasury Bills had doubled. No one will continue lending money to anyone who continues to borrow and borrow. The Central Bank and the NIS should definitely stop lending the Government any more money,” Abrahams added.
The Opposition senator argued that if a properly advised commercial bank or a private entity does not pick up any Government paper, then the NIS and the Central Bank should not be asked to do it.
Abrahams concluded by saying: “For the love of country, this madness must stop. Without guarantees from Government senators that the Government will not force the Central Bank and the NIS to pick up Government Treasury Bills, we on this side cannot support this resolution.”