A key economic advisor to the Prime Minister has come out fiercely defending the country’s relationship with two-man advisory firm White Oak, whose unprecedented fee for negotiating Barbados’ sovereign debt has gained international scrutiny.
In an article published by the London-based Financial Times (FT) last week, Barbados external creditors were reportedly fuming at what they called “absurd” $27 million advisory fees for a boutique firm.
Special Envoy to the Prime Minister on Investment and Financial Services, Professor Avinash Persaud declared that he was “disturbed” by the article, written by New York-based reporter, Colby Smith.
Professor Persaud defended FT’s classification of White Oak as a “little known firm” against other questions raised about Government’s decision to enlist its services.
In a letter to FT, he said: “You refer to White Oak Advisory as a little-known firm, but neglect to point out that of the 14 sovereign restructurings in the world since 2005, White Oak has advised seven of them.”
Persaud declared White Oak “an obvious choice for Barbdos”.
The economist questioned the timing of the potentially damaging report, in which external creditors complained that the fees were at the same level as those paid to Greece, a country restructuring a debt 40 times larger than Barbados’.
Professor Persaud argued: “We weighed costs with benefits. Following the domestic part of the debt restructuring, Barbados’ debt has fallen from 175 per cent of gross domestic product including arrears, the third highest in the world, to 125 per cent of GDP and is on track for less than 100 per cent. Greece’s debt remains the second highest in the world.”
Instead, he credited the advisory firm with playing a key role in stabilising the country’s financial system, allowing Government to increase welfare and pension payments and “ringfence” public health and education, “in the most shared economic adjustment in history”.
Last Friday, the Prime Minister’s
Press Secretary, Roy Morris, said the article’s intention was to “distract and distort in order to put pressure on the Government to cave in during the negotiations to restructure the foreign debt”.
Democratic Labour Party leader Verla Depeiza, who said the questions raised in FT’s article were consistent with concerns raised by the party almost a year ago.
Economist Jeremy Stephen also described the article as concerning, arguing that disgruntled external creditors through the international media, could damage Barbados’ perception as a hub for international investment and urged Government to speedily reach agreement.