‘Devil’ in the details must be known

There have been varied views within the political arena following the news that “agreement in principle” has been reached between Government and the Barbados External Creditor Committee.

This morning both the Opposition People’s Party for Democracy and Development (PdP) and the more established Democratic Labour Party (DLP), expressed relief that the one-year-old stalemate, which threatened Barbados’ ability to obtain international financing, appears to be over.

However, at the same time both parties are dissatisfied with the level of detail made public about the deal. President of the DLP, Verla De Peiza, told Barbados TODAY that among her concerns, was the term “agreement in principle,” as this suggest that the details were only beginning to be fleshed out.

“We do not know what an agreement in principle really means and we need to have the details put before us. There are simple questions which need to be answered such as what is the interest rate on these new bonds, because usually when you have a longer maturity period then you have a higher interest rate. So, we need to know that type of detail,” De Peiza said.

She added: “Whilst we are happy to be bringing this chapter to an end so to speak,  as obviously the negotiations are still ongoing, I would reserve full commentary, outside of saying that it is a relief, until we have the full details. We really don’t know what the provisions are, so it’s difficult to say whether it is a great deal or not, but it is just a relief to get some sort of report.”

Apart from the finer details, De Peiza called for clarity on the makeup of the Barbados External Creditor Committee, contending that it needs to be made public if this group comprises the entire list of Barbados’ external creditors.

Opposition Leader Bishop Joseph Atherley had a very similar point of view. He noted that the “devil would be in the details” of the deal.

“I am glad to hear that there is some word from Government as to the state of negotiations with the external creditors and I think all of Barbados would be glad to hear that. However, the devil usually appears in the details and we wait with bated breath to hear fully what the details will be because they would have wider implications for the Barbados economy. I will reserve comment until we have more in-depth details, but I am happy to at least have a report as to what is happening with this very serious matter,” he stressed.

However, head of Solutions Barbados, Grenville Phillips II was a little more upbeat in response to the news. While he is waiting for more in-depth analysis of the numbers, he praised Government for reaching the deal in the time period that they did. He also contended that the funds paid to the London-based financial consultancy firm, White Oak, for negotiating the foreign debt, was “well worth it”.

Bishop Joseph Atherley, Verla De Peiza and Grenville Phillips II

“Having been able to agree on a deal now provides some certainty on the way forward, so I am happy that a deal has been struck. I see that there is a two-year delay if we are impacted by natural disasters and I believe that this is a brilliant initiative. I think that the money paid to White Oak for the external debt was well worth it,” he said, noting however that firm was still “grossly overpaid” for their role in negotiating the local debt.

For the last year, a deal with the foreign creditors remained a question mark over the Mia Mottley-led administration’s efforts to restructure the economy, with one attempt at reaching an agreement falling through the cracks early this year.

In a joint statement released last week, the conditions for breaking the year-long stalemate included “a reduction of 26.3 per cent in aggregate sum of the original principal amount of the debt obligations and the past due and accrued interest as of October 1, 2019”.

Under the agreement, the external creditors would “exchange certain of Government’s US dollar denominated debt for new bonds issued by Barbados”, the statement said.

This includes Barbados’ 7.8 per cent fixed rate bonds due 2019, 7.25 per cent notes due 2021, 7 per cent notes due 2022, 6.625 per cent notes due 2035 and a floating rate loan with final maturity in 2019. It is anticipated that the new bonds, due 2029, will be issued with an aggregate face value of US$500 million.