Barbados is set to undergo a debt restructuring programme never before undertaken anywhere in the world, said co-Minister of Finance Ryan Straughn.
As a result, Barbadians are being asked to hold strain as Government will have no choice but to implement tough measures to rescue the struggling economy, he told the one-party House of Assembly as it moved to pass the restructuring plan into law.
While describing the economic situation as “the worst ever in the country’s history” he admitted that the road ahead was going to be a tough one as Government had been left with very few options.
Debating in Parliament today on the Debt Holder (Approval of Debt Restructuring) Bill 2018, Straughn revealed there was no easy fix for Barbados, which had now become the third most indebted country in the world behind only Japan and Greece.
“We must undergo the most comprehensive debt restructuring ever undertaken by any country any part of the world right now. We in the BLP understand what it takes to govern and there are some harsh decisions which have to be taken over the course of the next few years, but we are not scared because there is hope for the improvement of lives in ordinary Barbadians,” Straughn insisted.
“This has been a tough ask for the Government of Barbados, from the perspective that having inherited on May 24 of this year, a financial situation that has been the worst handed to any Government in the history of Barbados, that this Government had to take clear and decisive action in order to maintain the stability of our exchange rate.”
When the Democratic Labour Party (DLP) Government took office in 2008, the island’s debt was $6.5 billion, he noted.
By the time the BLP was voted into office on May 24, public debt had ballooned to almost $15 billion, he told fellow lawmakers.
The level of debt has forced Government to make harsh decisions such as suspending external debt payments in June, he said.
Failure to do so, he said, would have resulted in the island’s foreign reserves plummeting to merely two weeks of import cover.
“We did not suspend external debt payments because it was on a whim. We wanted to ensure that every Barbadian as they go about their business, that there is clear certainty with respect to what will stabilize this economy.”
“Due to a completely flawed economic policy, this Government made the determination that we had to embark on a comprehensive, debt-restructuring exercise, the likes of never been seen before any part of the globe,” he stressed.
But Straughn cautioned Barbadians that things would not be easy during the restructuring exercised. .
While the Government would make sure everything was done right, it was going to be extremely tough, the economist and first-time MP warned.
“Going in a different direction means that along that course of correction there has to be sacrifice. We are changing what happened and in correcting what happened it means that there must be sacrifice and the burden must be shared as fairly as possible across everybody.
“The road ahead is going to be very, very, very, very tough . . .” Straughn admitted. “We must take it within ourselves to dig deep, hold strain during this adjustment period, such that when we are able to announce that we are meeting our targets on a quarterly basis, that the help people have pledged will come.”