A Government Senator has argued that funding for much of the infrastructure required to make the country appealing to the private sector must come from the National Insurance Scheme (NIS).
Speaking in the Senate during debate on the National Insurance and Social Security (Amendment) Bill 2017, Minister of State in the Prime Minister’s Office Senator Darcy Boyce insisted that an important role of national insurance schemes everywhere was to generate resources for a country’s economic development.
“National insurance schemes have to be concerned to see investments occurring constantly. Investment must be in infrastructure which promotes the growth in the private sector. National insurance schemes succeed when employment is created, they succeed when incomes are generated,” he said.
Amid concerns about Government’s borrowing of NIS funds, Boyce suggested that Barbadians should recognize the large number of developments in the last five decades that have been made possible through the National Insurance Fund.
He highlighted a $70 million loan to Government to rebuild and renovate police stations and courts as example of such projects.
Boyce contended that it was better to invest the money in Barbados, than to use invest it overseas and create jobs for other people.
However, in recent months Government has been warned by international credit ratings agencies including Moody’s
about its mounting debt burden, which reached 111 per cent of GDP at the end of 2016.
In downgrading the island back in March, Moody’s pointed out that the local authorities had accumulated a large stock of arrears to the private sector and the NIS, estimated at a further 11 per cent of GDP at the end of fiscal year 2015/2016.
“Large refinancing requirements and the high interest burden, which consumes around 27 per cent of government revenues, pose increasingly severe credit risks,” the credit ratings agency said at the time while lowering Barbados’ Government bond and issuer ratings to Caa3.
“Given the scale of the fiscal and structural reforms needed to correct the rising imbalance, the likelihood of a credit event is now very high,” it had also warned.