Former Prime Minister Owen Arthur has warned that a pre-condition for growth in the Barbados economy is for the Government to address the country’s debt.
Arthur issued this warning to the Freundel Stuart administration last night while making his contribution to the 2015-2016 Financial Statement and Budgetary Proposals.
The St Peter MP also suggested that if he was still the leader of the Government he would have done what Jamaica and St Kitts & Nevis had done by going to the international financial institutions to request refinancing of the debt.
He noted that in the United States there were bankruptcy laws, which allowed companies to reorganize their debt and to put themselves on a stable footing.
“President [Barack] Obama allowed Detroit to recover by dealing with its debt,” said Arthur, adding that “there is no disgrace in dealing with the debt”.
He further pointed out that “Guyana is the fastest growing economy in the Caribbean because the Paris Club helped Guyana refinance its debt.
“Jamaica has recently had an upgrade of its credit rating precisely because it has dealt with the debt. There is no shame in it. In our instance, we are becoming the victim of foolishness,” Arthur said.
He challenged recent suggestions made by the Governor of the Central Bank Dr DeLisle Worrell that the economy was stable and that Barbados did not have a debt problem.
“If the Governor does not believe that we have a debt problem then he will not recommend to the Government that it should deal with it,” said Arthur, who also questioned the Central Bank’s thrust in encouraging Barbadians to invest in Government savings bonds.
He said: “ On principle I cannot complain about that because Barbados’ saving rates are about the highest in the world. However, I urge that the Minister of Finance if he is going to ask people to take up saving bonds try to do as much as can be done to restore Barbados’ credit rating for a specific reason.
“This year the Government is to borrow $1.7 billion to finance the difference between expenditures and its revenues. With a credit rating which says Barbados is not at investment grade, institutional investors are debarred from investing in bonds that are not at investment grade,” Arthur said.