As Government prepares to enter into formal negotiations this week with the International Monetary Fund (IMF) on a balance of payments support programme for Barbados, we cannot help but reflect on some of the most recent comments made by the minister responsible for the island’s bread-and-butter tourism industry.
For one, Mr Kerry Symmonds, in the face of strong warnings being sent from the industry this past week that it does not have any appetite at all for any more taxation, has been adamant that there would be no turning back on Government’s plan for a higher tourism tax take.
It begs the question, will our visitors simply do as the Government expects and soak up the new levies or will they rebel to the point of staying away?
We hope that the former and not the latter will result.
But even if our numbers hold, how does our Government really intend to shore up our foreign reserves if, as the minister now says, the planned sale of the Barbados Hilton Resort and the Barbados National Terminal Company Limited (BNTCL) are now being looked at by the Mia Mottley-led Government as absolute ‘last resorts’.
If not the BNTCL or Hilton, where next Mr Symmonds will we be looking to shore up our ailing foreign reserves?
Truth be told, we were never very keen with the BNTCL sale given our dependence as a country on imported fossil fuels.
This is not to suggest that Sir Kyffin Simpson is not a man of his word or that he ever meant anything less than the best for Barbados. But surely it is uncomfortable to say the least to have one of the biggest importers and retailers of oil, Sol, holding the keys to the very terminal that distributes and controls our oil domestic oil supply.
In fact, we could very well sympathize with Sol’s main competitor Rubis and agree with the objections raised by the Fair Trading Commission (FTC) to block the multi-million-dollar sale from going through.
As the FTC would have explicitly stated in its ruling last year on the matter, “The Commission is of the view that this transaction in the upstream market for the storage and distribution of auto fuels, JetA1 fuel and HFO would significantly lessen competition in the relevant downstream markets of the retail of auto fuels and distribution of JetA1 fuel. The Commission believes that there could be foreclosure post-merger which would allow the applicants to increase the cost to rivals, thereby leading to upward pressure on their sales prices. Sol could restrict or refuse access to current and potential marketers at the terminal, or offer access only on discriminatory terms. In addition, the possibility of Sol having access to sensitive information related to its competitors would be increased.”
The Commission was also of the view that “the ownership of the bottleneck facility, along with the proposed higher throughput fees charged post-merger, may provide a sufficient cushion for Sol to engage in anticompetitive tactics in any of its downstream operations, which could potentially have a negative impact on consumers”.
Furthermore, the 15-year moratorium requested by Sol was “inherently anti-competitive”.
Therefore, it ruled that “the merger as currently structured and presented to it, does not qualify to be permitted under Section 20 of the FCA.
The other major transaction to hit a snag was the proposed sale of the Hilton Barbados Resort, which we are much less sentimental about, only for the fact that Government has not had a good record of running anything – least of all a hotel.
Therefore, with Mr Symmonds basically throwing both deals out of the window for now, the billion dollar question is how does Government really intend to redress the island’s dwindling foreign reserves position, deal with an out-of-control national debt in the order of 175 per cent of GDP with a view to stabilizing an economy that with taxation and all, is still severely in the red.
Maybe next time Mr Symmonds will not only tell us what his Government is not doing, but what it intends to do, apart from raising taxes, to shore up the falling reserves.