Senate okays overdraft payoff

The Senate today approved a $26.3 million loan to repay the overdrafts of three state-owned enterprises.

As she introduced the bill, Acting Leader of Government Business in the Senate Senator Kay McConney said the loan from Republic Bank is to cover the overdrafts incurred by the Barbados Transport Board ($10 million), the National Housing Corporation ($10 million) and the Queen Elizabeth Hospital ($6.3 million).

In explaining the transaction, Senator McConney said that when the Labour Party came into office last year, the three state agencies were “in a lot of debt”.

She explained: “The Ministry of Finance and its advisers spoke to the creditors and agreed to certain terms.

“Now they recognised when the domestic debt exchange was negotiated and successfully completed in October 2018, and Government took over the $718.1m in loans from the state, but the overdraft facilities of the SOEs were not included in the debt exchange.”

Senator McConney said the term loan will run for 18 months, and payments will be a combination of principal and interest at a fixed interest of five per cent.

She said the loan would not adversely affect Barbados’ current financial position, suggesting it was well within the parameters set for the economy.

Senator McConney told the Senate: “The legal authority for this loan is facilitated through the Special Loans Act, Cap 105.

“The House would wish to know that $2.5 billion is the maximum prescribed by law.

“The amount of the outstanding loans under this facility is $693.3 million as of May 31 this year, so the additional $26.3 million being proposed in this resolution will still keep Government within the maximum limit.”

She continued: “Assuming that Central Government’s arrears are held constantly at $293 million, which is where we are now, this loan will raise our government debt by 0.3 per cent of GDP.

“As of May 31, 2019, the debt of the Central Government and the external guaranteed outstanding debt was $12,419.8 million.

“Our debt performance threshold targeted under the extended fund facility up to the end of September 2019 is $12.698 billion, so this debt is within the performance threshold that has been targeted, and if we consider our other scheduled payments this should reduce Barbados’ debt stock by $89 million.”

The resolution was passed, but just before the conclusion of this afternoon’s session, Senator McConney named the four members of the Senate who will be part of the joint select committee assigned to examine the Medicinal Cannabis Industry Bill.

The quartet is made up of Deputy President of the Senate Rudolph Greenidge, and Senators Dr. Crystal Drakes and Dr. Christopher Maynard, and Opposition Senator Caswell Franklyn. (DH)