Don’t be fooled by Prime Minister Freundel Stuart again!
This was the strong word of caution issued by his predecessor Owen Arthur today, in light of Stuart’s recent assurances that the island was neither on the brink of a dollar devaluation, nor entry into any formal programme with the Washington-based International Monetary Fund (IMF).
While maintaining that Barbados’ fiscal position was dire, Arthur, a trained economist, said though he considered Stuart to be “an honourable man” and was prepared to take him at his word, Barbadians need only remember who would have told them in the last general election campaign that no one would lose their jobs.
“I have your back,” said Arthur in clear reference to the solemn promise made by Stuart in the 2013 campaign that there would be no major public sector lay-offs if his ruling Democratic Labour Party (DLP) were returned to office.
“. . . I remember that it was said that no public servants would have lost their jobs,” the former Prime Minister said, in light of the recent decision to send home 3,000 Government workers.
Still bruising from the harsh ridicule he got at the time for suggesting that privatization was the way forward, Arthur further recalled that the election was won by the DLP on the basis that “they will not be selling any assets, but Arthur wants to sell assets”.
“I was brutalized by an old lady in an [television] ad who said that ‘Owen Arthur wants to privatize’ and now the Government is privatizing.”
However, in retrospect, Arthur told Barbados TODAY: “I was honest enough to tell the country that I could not see how the country was asset rich and cash strapped and I couldn’t see how we could get through without selling assets and I was slaughtered for it.”
Therefore, he believes Barbadians need to be cautious in terms of all the DLP has to say about the economic way forward.
“I have heard the Prime Minister [on no devaluation and no IMF]. I have to say he is an honourable man, but I also know he would have said that nobody was going to lose their job,” the former leader said with a chuckle, while recalling Mark Anthony’s comments about Brutus in William Shakespeare’s Julius Caesar.
“Freundel is a superman,” Arthur added.
On a more serious note, he said one only had to look at the way in which the foreign exchange reserves were plummeting to get an idea of the critical condition of the country.
“A large part of Government’s financial needs have been met recently by the printing of money by the Central Bank of Barbados. In the process the foreign reserves of the country have fallen from $1.5 billion to less than $700 million,” he pointed out, while cautioning that “if the process of printing continues then Barbados will so deplete its foreign exchange reserves that it will be prostrate before not only the IMF, but the rest of the world”.
Arthur said the situation was such that the Central Bank Governor Dr DeLisle Worrell had now gone on record as saying that he wanted to put an end to the printing of money.
“If that is the case, it is not a moment too soon, but it puts an onus on the Minister of Finance to tell the country what is the credible alternative he has in mind to the use of the Central Bank’s printed resources to finance its operations.”
The former Prime Minister also called attention to Sections 48 & 49 of the Central Bank Act which indicate that the Governor of the Central Bank must bring to the minister’s attention any threat to monetary stability, along with suggestions as to the corrective policy positions to pursue. If the minister does not want the Central Bank to follow that advice, the minister then has to put what he wants done in writing and will have to publish it in the Official Gazette.
“So we have reached that moment in Barbados. A Central Bank Governor has said he wants to stop printing money as a means by which Government is financed, but also the reserves are depleted and it would be incumbent now that they would now have to put it in writing,” he stressed, while warning Government that it still needs to address the fundamental problem of how large a deficit the country can carry and how it will be funded.
In the wake of Government’s recent announcement of the planned sale of the Barbados National Oil Company Limited to Sol, Arthur also cautioned that no “one-off sale” of state assets would do.
“A one-off sale of this thing or that thing is not enough. In fact, the sale of assets should be used to pay down debt because if you sell a house you can’t use the proceeds to buy food, or you shouldn’t. You should use it to find somewhere else to live and if the Government is going to sell assets it should use the proceeds to pay down its liabilities. So the notion of Government selling these assets and using them for current expenses, in my view, is not on. You should use them to reduce the debt, especially if the assets being sold had a liability to begin with. So that some of the solutions I am hearing are not full and utter solutions,” he said, while taking a swipe at the Mia Mottley led Opposition Barbados Labour Party saying, “this was the critical issue it should be dealing with since it is going to affect the pocketbooks of every Barbadian”.