It is more than ironic that in the midst of all the talk of austerity and the need for urgent national belt-tightening that our Government continues to boldly engage in a seemingly unfettered spending spree.
We have already placed on record our disgust over the timing of Prime Minister Freundel Stuart’s latest vehicle acquisition — an S-Class Mercedes Benz valued at $700,000 — so there is no use in rehashing that, except to say that Mr Stuart and his entire Cabinet really need to take the lead in making the economic sacrifice that has been foisted on the rest of us by his administration, whether we like it or not.
And if you thought Mr Stuart’s luxury car purchase was bad enough, Minister of Finance Chris Sinckler would make a public spectacle this week of his signing of a new $68 million (US$34 million) loan agreement with the Inter-American Development Bank.
Now don’t get us wrong. We are under no illusion that everything must come to a screeching halt because we are seeking to navigate the most treacherous of economic waters. But, good grief! How much more debt can we really afford to pile with our creditors already gripping us by our trousers and shaming us to get down on our knees?
Before this week’s signing of the US$34 million loan agreement to finance a project to use cleaner fuels and renewable energy in Barbados, Mr Sinckler had himself reported that Central Government’s disbursed and outstanding debt stood at approximately $13.4 billion as at March 2017, which amounts to approximately 145 per cent of gross domestic product, compared to $12 billion for the corresponding period ending March 2016.
As a result, total debt payments for the period April 2016 to March 2017 amounted to about $1.5 billion with interest payments of $739 million and amortization payments of $805 million. And, when taken in the context of the 2017/2018 Estimates, it means that nearly half of Government’s projected total spending of $4.5 billion will be on repayment of loans, as the national pie that has traditionally been available to afford for our education, health care and other social services, is simply shrinking by the day and, in the absence of anything short of a miracle, will be able to feed less and less.
Therefore, it simply does not help matters for our Government to pile on any new debt at this stage.
If anything, the Freundel Stuart administration should be presenting credible evidence that it is making a concerted and determined effort to cut back on its spending with a view to reducing and ultimately erasing its worrying deficit of close to $600 million at last report back in March.
Yes, the latest IDB agreement may have been in the works for several years now and may have only now been given official approval. We get that!
And yes, it is for a seemingly noble cause – development of the renewable energy sector. We get that too!
But when taken in the context of all that renewable energy advocate Ralph Bizzy Williams previously said, and what Aidan Rogers of the Barbados Renewable Energy Association also had to say this week to the effect that Mr Sinckler’s Budget could effectively kill off a number of these same businesses in the coming months, this latest loan signing which aims “to enhance Barbados’ energy security and sustainability by diversifying the energy mix through promoting the use of cleaner fuels, specifically natural gas for power generation; and increasing the use of renewable energy sources”, could be all for naught.
In fact, our Government appears to be spinning top in mud if economist Jeremy Stephen is to be taken at his word about the lack of consideration in this year’s Budget of the risks posed by de-risking to our vital international business sector. Wasn’t that the new economic buzzword that was being thrown around by our very Prime Minister at last July’s CARICOM summit at which a committee was set up, with Barbados playing an integral role, to mitigate the worrying threat?
That being the case, how could such risks not have been factored into Mr Sinckler’s Budget giving Mr Stephen or anyone for that matter cause to caution Government that its latest measures will only serve as added insult to the injury already resulting from the termination by international banks of their correspondent banking relationships with local banks, as well as their strategic market repositioning, withdrawal from selected markets, closure of the accounts of selected clients and classes of clients, and relocation of business, particularly to the US, to take advantage of regulatory arbitrage?
When everything is taken into account, including the shouts of the trade unions, the ZR drivers, the Opposition, the small business sector, the private sector in general, it would seem as if the left hand doesn’t know what the right is doing.
Which would be laughable if we were not all doomed to fail as a result.
God help us all!