A report in today’s Financial Times could have a damaging impact on Barbados’ image as a hub for international investment, hurting the already long economic recovery, outspoken economist Jeremy Stephen said tonight.
In an interview with Barbados TODAY, he described the perception of Government’s agreement with advisory firm, White Oak as embarrassing to global spectators.
He argued that Government’s inability to reach a restructuring agreement with foreign creditors after over a year of negotiations is now being monitored very closely by the global community. Contending that the country was relying on tremendous outside investment to kick-start its economic recovery, Stephen said the uphill battle was likely to become even steeper.
He told Barbados TODAY: “The process in and of itself has been messy. Unconventionally, the foreign investors have been left out to dry for nearly a year. At the same time, we are going into a stage where foreign investment is going to drive our recovery. The talk around medical marijuana and our competitive tax rates and the ways being used to revive our international business industry, tourism and tourism spend.
“A lot of that is driven on the basis of investor confidence. The unfortunate thing is that whoever owns the narrative and can make it seem from a global perspective that the Government is anti investment that will put dampers on attracting credible investors.
“You’re going to get investors, but they may not be credible or may not have the resources to make a positive impact on the growth potential or future growth potential of Barbados,” Stephen added.
In the Financial Times’ story entitled Barbados’ creditors fume at absurd $27m advisory fees, placed the ongoing arrangement between Government and UK firm, White Oak Advisory under the microscope.
The Financial Times report predicted that the Mottley administration was likely to pay an amount similar to that paid by Greece on a defaulted debt nearly 40 times bigger to restructure approximately $910 million owed to foreign investors.
Defending Government’s decision, which was made some months ago in parliament, Press Secretary, Roy Morris again stressed that Government would save over one billion dollars per year for the next three years. He added that Government viewed the article as an attempt to “distract and distort in order to put pressure on Government to cave in
during negotiations to restructure the foreign debt.”
He added: “it is clearly timed to coincide with the presence of an IMF mission being on the island at this time. It will not work,” said Morris.
While Stephen has not discounted the efforts of external creditors to force the hand of Government, he warned that Government needed to take its implications very seriously.
The economist declared: “It smacks of a major embarrassment no matter how you want to look at it from a political angle.
“Even if it’s true that it may be a subverted tactic, it’s a case where they would have had for some period of time clear warning that the external credit committee would try to own the narrative. If they feel discontent, they are going to air it and they have better relationships with global bodies, which can distort the global community’s perception of Barbados.”
While the economist admitted that the $27 million dollars to be paid for the services of White Oak was not exorbitant in the grand scheme of things, if certainly appeared to be a terrible overpriced arrangement.
He continued: “If you look at the percentage of the debt that was restructured, nobody has ever paid that much fees for debt restructuring ever before and its not that our situation was more complex than what occurred in Greece and I side with the external credit committee’s position in the article… It is a major embarrassment on that end.