Dr Delisle Worrell, the former Central Bank governor who now advises the foreign institutions and investors owed millions by the Government, reported progress in the negotiations on restructuring its debt.
But Dr Worrell would not predict a new date by which external creditors were expecting a favourable deal, after Government has missed a March 31 deadline to agree to a plan. It has also not announced a new timeline just yet.
Government was hoping to give external creditors, who account for 20 per cent of its overall debt, a cut in interest and payments over a longer period, a similar plan that was reached with local debt holders back in September last year.
Asked today by journalists to provide an update on the restructuring plan for US-dollar holders of government debt, Worrell said “discussions are continuing”.
Worrell, who last December said the creditors had put forward their own proposal to Government, said the principle they were committed to “a restructuring proposal which works for Barbados, is in the best interest of Barbados, but also works for the creditors”.
Pointing out that the external creditors were managing other people’s funds including pensions, Worrell said they were depending on the increments they were getting from their investments in government paper.
“They have a responsibility to take care of the people who have put their money with them. So what we are working towards is a win-win situation, a situation which gives the Government space that it doesn’t have to repay the major
funds that are becoming due particularly in 2021 and 2022 but which also gives the pension funds a return so that they can pay the people who have contributed to these pensions over the years.
“I think there has been progress in the discussions and we are hopeful that based on this principle of achieving a win-win situation.”
The former Central Bank governor said while there were “many ways to skin a cat”, he insisted that creditors were not comfortable with the proposal that was initially put forward by Government.
He maintained that they wanted to arrive, through a process of negotiation and discussions, at a solution that everyone was comfortable with.
The veteran economist warned that the issue was not about the amount of external debt that Government had, but attention should be paid to settling favourably so that Government could attract future investments.
Dr Worrell: “If foreign investors do not end up with securities that they are comfortable with, marketable securities that other people will want to buy, then new investment becomes that much more difficult to attract new investment to Barbados.
“So the focus should not be on repaying old debt, the focus should be on creating conditions which allow you to borrow more in the future.
“If you have a choice between using your future foreign exchange resources to repay old debt and if the investors are saying we are quite happy to roll over that debt if you pay us some acceptable market interest, we don’t need to be repaid so you can use your new foreign exchange resources to actually do new investments rather than to pay old debt. That is the proposition that is before the Government.”
Late last week, Deputy Division Chief for the Caribbean II Division of the International Monetary Fund, Bert Van Selm, said it was critical that a deal be reached soon.
He argued that it would restore confidence in the economy and improve the country’s ratings by major rating agencies.