Government’s decision to default on external credit for an entire year has once again exposed the Barbados dollar to possible devaluation, a senior Democratic Labour Party (DLP) spokesperson has warned.
He has joined a chorus of both local and international dissenting voices, querying Government’s decision-making on the matter. In a scornful condemnation of the administration’s economic management, former Senator, Jepter Ince questioned why an administration with “all the consultants in the world” would have chosen to selectively default on its external arrears.
“If you as an individual tell the bank that you are not going to pay your mortgage anymore, you’re not going to pay your credit cards anymore, then you have chosen to default and become a bad customer in the banking industry,” the former Wall Street investment banker explained to party faithful.
“You defaulted on your international loans so your credit rating is bad and you can’t get any loans…and you can’t use the IMF’s money to buy garbage trucks and buses.”
Estimating the country’s external debt was now north of U.S $140 million, Ince issued a stern warning to Government.
“Nobody talks about the arrears, even the Central Bank doesn’t talk about the arrears on the international debt. Every country that defaulted on its international debt and ran arrears had devaluation…and I am sending out a warning to the Barbados Labour Party and to the Prime Minister. I am saying to them to deal with those arrears, because every country in the world that defaulted on its international debt and ran arrears had devaluation and I don’t want that for Barbados. We have nothing to devalue but our people, so Mr. Finance Minister, come and tell the people what is happening with the international debt and the arrears,” he urged.
Last month, two separate international media houses, the Financial Times and Bloomberg revealed alarming discontent by creditors over Government’s refusal to pay its debts. They also questioned the controversial US$27 million bill to White Oak consultancy firm, which is assisting Government with its negotiations. Local, independent economist Jeremy Stephen has also warned that the decision could result in tremendous hardships including food shortages in the future, if the country was unable to secure financing and investment from outside.
Prime Minister, Mia Mottley and other members of her Cabinet have continued to defend their handling of the situation, noting that the debt burden was unsustainable. The PM has also continuously praised White Oak for saving the country millions.
Ince however told a packed auditorium at The St Michael School that the previous DLP administration led by Freundel Stuart intended to reduce Government’s international debt gradually without causing “hurt, pain or dislocation” to Barbadians. Ince accused Government of offering little transparency about the extent of the problem.
“This Government has not laid a report from the accountant general in Parliament for a whole year. The accountant general report would tell me the position with the arrears on the foreign debt,” said Ince.
Accusing Government of running the country’s affairs on IMF borrowed money, Ince challenged the administration to bring evidence of real economic growth and revenue generation over its first year in office.
“They said to the people of Barbados that our foreign reserves were in dire straits and we were in trouble. Do you realise that in all the talk about foreign reserves, none of the car importers complained about not being able to bring in cars? Every Crop Over the stores were filled with all the goodies for Crop Over. None of the supermarkets complained about a shortage of goods, but now they are borrowing money to prop up the foreign reserves,” charged Ince.