The institution providing funding for the Barbados Economic Recovery and Transformation (BERT) programme is suggesting that lower interest rates and longer payment period may indeed be the best solution for external creditors.
This suggestion comes as government and holders of Barbados US-dollar debt are in a stalemate regarding what arrangement should be put in place to restructure that potion of the country’s debt.
A local debt restructuring plan was reached in September with holders of Government instruments taking a cut in interest and accepting payments over a longer period.
However, while Government was hoping to complete the external debt restructuring with a similar deal by March 31, external creditors, who account for close to 20 per cent of Government overall debt, have been refusing to accept this.
Deputy Division Chief for the Caribbean II Division at the International Monetary Fund (IMF) Bert Van Selm told Barbados TODAY that portion of the debt restructuring was critical to the contribution of the return of confidence to the local market.
“We hope for this matter of course, to be resolved at some point. Also, from a confidence point of view, that is important because only after the debt restructuring has been completed you can expect the rating agencies like Standard & Poor’s and Moody’s to start upgrading Barbados. So it is important that the process is wrapped up at some point,” he said.
While insisting that the process should not be rushed, Van Selm insisted that what was also important was for future payments to be “smooth”.
“Before it was being restructured it was quite lumpy; so there were concentrated payments that were due at certain points in time that made it difficult for the Government of Barbados to meet its targets. So one important outcome of this debt restructuring would be a much smoother payment of debt going forward, but hopefully in terms of maturity and interest rate, this is something to be discussed between the government and its creditors,” he said.
“The IMF doesn’t get involved in this, but from a debt sustainability perspective of course, lower interest and longer maturities would help. What is important for us in this is that there is an orderly process and that government of Barbados shares data and negotiates in good faith. And that is what we have been seeing so far, so that is very good,” he added.
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If the govt was to pay its US debt the way external creditors want, the precious foreign reserves would take a serious hit. And thats what they are trying to avoid.
The external creditors did not extend credit to the Government only to end up being punished for being the country’s bankers. I expect this process of negotiations to last a while. Can you blame them?
They bullied the local creditors. It’s not working for the external creditors.
Carson C, No
Tax payers and non-tax payers would have to foot the legal costs.
BLP parliamentarians would bear no costs. They would simply justify to their supporters the additional costs to Barbados.
Yes Carl Harper, shoot this messenger as well, the truth is out. This ongoing saga is also hurting our country’s ability to attract new investment. While the Rock Dundo bully could bulldoze Barbadian creditors, not so with the internationals.
Mia remains indicted internationally, let her ‘punch above her weight’ now. This boxing ring is too large for her to even survive the first round, she lacks the physical fitness for this fight. She’ll certainly be the only casualty in this fight by TKO. Very soon she will lay flat on the credibility canvass.
However, while Government was hoping to complete the external debt restructuring with a similar deal by March 31, external creditors, who account for close to 20 per cent of Government overall debt, have been refusing to accept this.
The Right Hon PM should continue her attempts at restructuring the external debt with a similar deal. Let the external creditors continue to resist.
The last time I checked, 80 per cent was still greater than 20 per cent if you get my drift.
Can we continue to manage 80 per cent of the overall debt while the external creditors attempt to hold us hostage over 20 per cent?
My guess is a big fat YES.
Stay the course Madam Prime Minister.
The same people criticizing Mia are the ones who created the debt. They are also complaining about the professional fees we have to pay to a top team of international negotiators who are trying to save Barbados billions. Guess who is advising the foreign debt creditors against Barbados none other than our previous Central Bank Governor. He should be declared as Persona non Grata, His Barbados passport cancelled and sued for Breach of Fiduciary . He should be shunned by everyone.
Jerry u serious…what rock you now crawl out from..Barbados’ debt was climbing way before 2008. The problem is the dlp didnt have the public relations of this govt.
BLP $6B; DLP $9B