Amid signs of growing impatience among Barbados’ foreign creditors – represented by the umbrella Barbados External Creditor Committee – Government’s Special Advisor on the economy Professor Avinash Persaud is accusing them of trying to pressure Government into submission.
He’s declared that Government is resolute in its position that any debt restructuring offer for external creditors would be “similar” to what was recently given to local holders of government paper.
His comments came as external creditors issued a statement today, urging the Mia Mottley administration to engage in good faith negotiations to resolve the external commercial debt default.
“By resolving the external default in a consensual and expeditious manner, Government would be in a position to accelerate the country’s credit rehabilitation, lower the credit risk premium and take important steps to regain external market access, a key objective of the reform programme supported by the EFF arrangement,” the Committee said.
The committee said it communicated to Government that the restructuring scenarios for US dollar-denominated debt released on November 21 by the administration was “not based on transparent or open discussion with holders of these instruments”.
“Rather than providing guidance, these scenarios risk delaying efforts to reach a consensual agreement to resolve the external commercial debt default to the detriment of all parties over the near-term,” it added.
The committee said it wrote directly to urge Government to honour its pledge to engage with all holders of external commercial debt in transparent negotiations to reach a consensual agreement that resolves the default in an expeditious manner.
Persaud stayed clear of giving any indication of how soon details of a plan for the external creditors would be disclosed, but he told Barbados TODAY that the Government was indeed in discussions with the external creditors and has been transparent.
“We are in discussions with the external creditors. Our position has been highly transparent. You have heard me say before that we have reduced the pain as much as we can by spreading the pain as much as possible,” said Persaud.
“This means, and you have heard me say this before, that we expect the external creditors to share in the adjustment no more or no less than other institutional creditors,” he said.
Immediately after coming to power on May 25, the Mottley administration suspended all debt payments, in light of dwindling foreign exchange reserves and realizing that Government was burdened with the repayment of a $450 million loan from Credit Suisse. Payments on that loan are due every June and December.
A debt exchange offer for local creditors was announced in mid-September, with Government officials outlining that the vast majority of loans would be swapped for new debt instruments, suggesting a haircut to creditors and stretching the length of time over which they will be repaid.
Persaud suggested that external creditors would not be disadvantaged, but would receive a similar offer.
“We have offered that. Naturally they would desire a far more modest adjustment and are using you and the media to pressure us into submission. You will not recall the domestic creditors doing that,” said Persaud.
“We are here and our intentions are clear. We are resolute. But we are also happy and willing, as we did with domestic creditors, to discuss iterations that they would prefer that deliver a similar adjustment shared by all. We hold solemnly to the principal of fairness and similar treatment,” he said.
Giving an indication that Government would not be bowing to any pressure, the senior economist suggested that Government could afford to delay making a decision as it relates to external creditors since it was in a somewhat better position as a result of ongoing adjustments.
“The adjustment we have made to taxes and Government expenditures including, regrettable job cuts, has put us in a position that we do not need to borrow any more money from the external creditors and so we can afford to wait to ensure that Barbadians get the best deal that is fair to all,” said Persaud.
Back in September, Governor of the Central Bank Cleviston Haynes gave the assurance that external creditors would be getting full details in “the not too distant future”.