Former Prime Minister Owen Arthur today accused Minister of Finance Chris Sinckler of inflicting unnecessary pain on the people of Barbados.
While warning that the half-billion dollar adjustment programme effectively amounted to a devaluation of the Barbados currency, Arthur suggested that an International Monetary Fund (IMF) adjustment would have been far easier for the entire country to swallow.
He explained that based on the IMF’s Article 1V Consultation last year, Government could have been afforded the equivalent of $310 million annually over a three-year period.
However, he said the Freundel Stuart Government had chosen instead to make an adjustment of $542 million over nine months.
“The adjustment that the minister is bringing to the House is going to inflict about $250 million more pain on this economy than if the Government of Barbados had chosen to enter a programme with the International Monetary Fund,” Arthur said, while warning that Government’s alternative of seeking a homegrown remedy did not match up to the IMF solution based on the country’s “seven-fold problems”.
“For the first time in the history of the country the Government as effectively run out of entities from which to borrow,” said Arthur in further illustrating the extent of the island’s economic problems.
Added to that challenge, the ex-Prime Minister and former Minister of Finance warned that Government could not continue printing money because of the pressure it places on the island’s dwindling foreign reserves, which fell below 11 weeks of cover to under $700 million last December.
Amid Government’s “severe” debt problem which amounts to over 160 per cent of gross domestic product, Arthur zeroed in on the state’s debt to the University of the West Indies, saying the hundreds of millions now owed threatened the very survival of the educational institution.
He also pointed out that “the administration has massive arrears owed to the private sector. And, a similar debt is owed to Barbadian householders in tax returns.
“But if you have a programme with the International Monetary Fund and the fund lends money, it lends you under the condition that if you have arrears you have to clear them,” Arthur said while emphasizing that Government’s outstanding debts could have been cleared had it decided to go the IMF route.
Arthur also zeroed in on the issue of debt rescheduling, saying that with Sinckler ‘s plan to get the National Insurance Scheme and the Central Bank to give $70 million in relief, “the debt maturing next year alone will increase by over $200 million.
“And for each of the next four years the debt of Barbados will be almost $400 million each year.
“The Government of Barbados cannot rely on the Central Bank and the National Insurance just to help it with the debt,” he said.
“Government has to have a programme, agreed not just with the NIS and Central Bank, [but] with all of its creditors to take us out of the situation of an unsustainable position where trying to pay the debt over the course of the next four years will put the Government in the position where it will default on the payment of the debt and in fact may even deplete its reserves.”
Looking beyond 2017, Arthur said while Barbados “continues to function under the shadow” of the 1945 Moyne Commission Report, which had inspired the country’s leaders Grantley Adams and Errol Barrow to embark on a programme of social-democratic change because “the large mass of people of Barbados were living in situations of complete and total poverty”, the island now has “to build a new society and economy”.
He emphasized that though Adams and Barrow saw that “the role of the state has to be paternalistic, it had to give everybody a helping hand to help to lift them out of poverty . . . the state now has to find a new way enabling those who have been lifted out of poverty by the state’s actions to be able to assume more responsibility for their own welfare.”
One such responsibility, he said, should be tertiary education, recalling that in the 1990s he had brought to the House a registered education savings plan “to enable people to start to save to pay for their children’s education at the tertiary level”.