The ruling Democratic Labour Party (DLP) must either be prepared to shoulder the blame for Barbados’ worsening economic situation, or step down from office.
This stern warning from Opposition Leader Mia Mottley last night as she addressed a political meeting of her Barbados Labour Party (BLP) in the wake of the island’s latest economic downgrade — the 17th the country has suffered since the DLP came to power in 2008.
Warning that the situation would negatively impact Government’s ability to repay its debts, Mottley explained that “every credit downgrade means that there are certain existing loans” on which the interest will be higher.
“If you were paying $20 million in interest yesterday you will have to pay $22 or $23 [million], because the people say in the contract that if they get a downgrade that the cost of the interest goes up,” Mottley told party supporters gathered at the Hilda Skeene Primary School in Ruby, St Philip for Sunday’s nomination of Dr Sonia Browne, who will carry the party’s banner in St Philip North against Minister of Transport Michael Lashley.
Also warning that “it doesn’t stop there”, Mottley said: “It means that if you want to go now and look for a loan, there are less people who can lend you money because the international community cannot take up people’s pension funds, people’s insurance money and then come and give it to you because they see you are not a good risk.”
Mottley further cautioned that the negative rating would also impact businesses, making reference to Sagicor, which relocated its headquarters from Barbados to Bermuda
this year, following a downgrade by Standard & Poor’s in December 2014 from B to a
“We have presided over downgrade after downgrade after downgrade since 2010 to the point now where Sagicor earlier this year, after 175 years pick up and say, ‘we gone
. . . because the Barbados Government cannot manage the affairs of this country to be able to put us in a position to benefit from being headquartered in Barbados’.
“From slave masters to colonial people, to Grantley Adams, to Errol Barrow, to Tom Adams, to Bree St John, to Erskine Sandiford, to Owen Arthur, even [David] Thompson, the company had lived here comfortably and get through, and it is only under these people now, who do not, and cannot, even represent their party faithfully, that we now stand to lose. Because companies have to go and find somewhere else to locate, because the country’s credit rating has been so devalued,” the BLP leader said.
Last Friday S&P downgraded the island’s long-term foreign and local currency sovereign ratings from ‘B’ to ‘B-’ while issuing a negative outlook for the island. The international ratings agency also expressed concern that the Central Bank continued to finance Government’s spiralling deficit, saying this was at odds with the goal to defend Barbados’ long-standing two to one currency peg against the US dollar.
S&P also expressed concern that the island’s fiscal adjustment programme again fell short of stemming another increase in debt to GDP. And on the heels of the August 16 Budget presentation by Minister of Finance Chris Sinckler in which several tax measures were announced, S&P said Barbados’ net general Government debt was expected to continue to rise toward just below 100 per cent of GDP over the next three years up from 93 per cent in 2015.
It also warned that there was “a greater than one-in-three chance” of a further downgrade should the Freundel Stuart administration be unable to lower its fiscal deficits, or if growth failed to strengthen, putting additional pressure on the country’s weakening external position.
In response, Sinckler has advised Barbadians not to be pessimistic about the economy.
In fact, a defiant Sinckler told the BET Credit Union 50th anniversary celebrations at the Hilton last night, that the country must see the current circumstances, “not through pessimistic lenses, but a lens that tells us that the glass in Barbados is not half-empty, but in fact is half-full, and we’re working to go to the top”.
He also suggested at the weekend that S&P had been changing targets.
However, Mottley dismissed Sinckler’s explanation, saying if anyone were guilty of changing targets, it was the minister himself.
“He came to you in 2010 and told you he wanted to increase VAT for 18 months. That target changed when the 18 months came and the VAT still on today, four years after the 18 months done.
“They came to you in 2013 January in an election and told you there will be no layoffs, there will be no sale of assets, and there will be no fees at the University of the West Indies. Well by the time six months was finished, between February and August of the same year, you had the announcement coming of layoffs; you had the announcement of assets to be sold, and you had the clear announcement that you will have to pay fees at the University of the West Indies.”
On the issue of debt, the Opposition Leader noted that Government still had not managed to reduce the figure as planned, adding that the island remained saddled with debt levels higher than what the minister promised they would be.
“They went and borrowed $450 million from Credit Suisse. The same loan that we got to pay more interest for now because they just downgraded us Friday night again . . .,” said Mottley.
She also accused the Freundel Stuart administration of doing a poor job of managing the country’s finances, and not representing the people.
“They told us that the reserves would go back up. Where are the reserves today? In the Budget, $883 million, tell me whose target is moving Chris? And then you want to say, all of them, ‘don’t blame me’, ‘don’t blame me’, ‘don’t blame me’. The Prime Minister started it in January in the Chamber of Commerce and all of them have taken it up as a slogan. Well, if you don’t want to be blamed, call the election!” she said.