As foreign creditors continue to baulk at a deal with Barbados to restructure its debt, the Government’s Chief Economic Counsellor has dismissed as “ridiculous” the notion that a local economist or firm could do the job.
Ambassador Dr Clyde Mascoll was responding to questions surrounding Government’s decision to retain the services of a two-man advisory firm, White Oak, along with its failure so far to settle approximately $3 billion in debt owed to external creditors.
The controversy centres around a $54 million payout to White Oak to advise on restructuring its sovereign debt. While local holders of Government paper have accepted a significant haircut and a lengthy repayment term, there is still no definitive timeline for a restructuring agreement with the external creditors.
Ambassador Mascoll, in defending White Oak consultancy, argued that there is currently no individual or firm in the region equipped to do the job.
“I stay out of these types of debates, because they’re all salacious and they’re intended to project a certain kind of image, but the notion that there is a Barbadian who is qualified and has been restructuring debt is not known to me and if there is one, then that person can step forward,” he challenged.
“So this notion that Barbados could have found a local individual to restructure Barbados’ debt is nonsense…this is a red herring and I have stayed away from red herring for almost a year now. The obsession that some people have with White Oak is unbelievable,” he said.
Joining a chorus of Government officials, Mascoll stressed that 80 per cent of the gigantic debt owed to local creditors was successfully restructured late last year, but admitted that negotiations for restructuring the external debt could continue to be challenging.
“That may take some time,” Mascoll acknowledged.
“On the external side, those people don’t have that kind of affinity for the Government of Barbados. They are purely capitalists and they invested to get a greater return…so yes, there may be some fallout from not being able to negotiate the external debt as fast, but it is not even a year yet and normally it takes longer to do external negotiations.”
Mascoll also rebutted suggestions that the current standoff could negatively affect the country’s attractiveness to international investors. Instead, he said Government’s decision to converge its corporate tax rate from 30 per cent to between one per cent and 5.5 per cent is a big plus.
“That convergence satisfied the OECD [Organisation for Economic Cooperation and Development] and the European union. I always said that what Barbados did was a masterstroke. To bring your corporate rates to that level would now inspire foreign investment.
“So on one hand, you’re trying to restructure your external debt, but on the other, you’re already repositioning the country’s competitiveness to a position where companies are still going to be excited to come to Barbados because of the restructuring of the corporate tax rates.”