Government, which is already saddled with $6 billion in debt, today moved to Parliament to increase its borrowing capacity on the local market by $1 billion, with the Opposition accusing it of “financial recklessness”.
Minister of Finance Chris Sinckler piloted in the amendment to the Local Loans Act that allowed the Freundel Stuart administration to up its domestic borrowing limit from $6.5 billion to $7.5 billion.
Speaking on behalf of the Opposition, Member of Parliament for St James Central Kerrie Symmonds said: “The Barbados Labour Party will not do anything to obstruct the Government as it embarks on this perilous and precipitous course of preparing itself for what ultimately will be . . . even more borrowing, neither will we aid or abet, or be party to, what we consider to be further financial recklessness.”
However, in explaining the move, Sinckler said it was a reality of governing small countries with resource constraints that Government would at times be unable to meet commitments for demands, provision of goods and services and the orderly management of the country based on the resources it brings in from taxes and impositions.
“So it is a necessary requirement that facilities be put in place to allow for borrowing for various purposes,” Sinckler said.
“In this case, this is entirely domestic,” he added.
At the last issuance of the Central Bank’s Securities Notice Report, the stock of debentures and Treasury Notes stood at $6.173.8 billion, of which $6.0425 billion was outstanding, the Minister of Finance explained.
He also acknowledged that Barbados’ poor international credit rating, which is currently below investment grade, had affected its foreign borrowing.
However, he suggested that it also a deliberate strategy on the part of Government to incur more domestic than foreign debt since it had more control over domestic circumstances.
“Fortunately for Barbados, we’ve been able to keep that differential more in favour of domestic,” Sinckler said.