An Opposition senator has suggested Government address economic growth in order to reap higher gains from debt restructuring or the economy may end up worse off than before.
Senator Crystal Drakes made the call as the Upper Chamber debated the bill to approve the debt restructuring deal with the foreign holders of Government debt.
While pointing to positive developments in the economy since embarking on the Barbados Economic Recovery and Transformation (BERT) programme, she said the economy was still in recession.
Citing an example, Senator Drakes said: “The last Central Bank report said the economy contracted by 0.2 per cent in September this year.
“In December 2018, that figure was 0.6 per cent, but in March 2019 it was 0.2 per cent, and in June, again it was 0.2 per cent.
“Despite the improvement in the tourism sector by 2.3 per cent, that was still not enough to stave off the fact that we are still in recession.”
Barbadians were experiencing side effects from the “medicine” prescribed, the opposition senator stressed.
Senator Drakes said: “Lots of people are now feeling the pinch through increased taxation and the retrenchment programme.
“Government has reduced our debt from 157 per cent in 2018 to 121 per cent, but that is because it has chosen to either write off a lot of it or refused to pay the people it owes.
“The reality is, Government could not reduce the debt without a cost attached to it, some sacrifice had to be made.
“We have also seen a major reduction of expenditures, with a reduction in the subsidies paid to state-owned enterprises, but in so doing, they had to reduce the number of workers on the payroll, or close agencies altogether such as the National Productivity Council.”
She expressed concern about the debt repayment arrangements from 2020 to 2029.
The senator told her fellow lawmakers: “Our external creditors agreed to take a 26.3 per cent haircut in what is owed to them, but they want their money back plus interest in ten years.
“So it means between 2020 and 2029, in total interest and principal we will be paying out US$940 million, with $360 million in interest, and these payments will be made every April and October.
“In April 2020 we start payments on interest amounting to US$17.7 million, then from October US$15 million, and we will close off past due interest bonds in February with a slightly smaller payment of $4.6 million.
“Those are payments for external negotiation. After that, we move onto the period of 2021 to 2024, where every year we will be paying US$35.5 million in interest twice a year.”
Government Senator Dr Crystal Haynes intervened, stating that there was a five-year grace period on the debt repayment schedule. But Senator Drakes countered that the reality is “while we try to pay off the debt, the economy must still be functioning and earning foreign exchange”.
She continued: “If we default on any of the payments owed between 2020 and 2022, the deal with the International Monetary Fund is off and that has serious ramifications for this country and its creditworthiness.
“I have heard about many projects and investment opportunities that may come into Barbados, but while we are looking for external investment, there are a lot of things that need reorienting in Barbados.
“If we are serious about growing this economy, we have to move away from a 20th century mentality in terms of how we do things, and that will come at a cost as change is not always easy, and at the national level it will be difficult as it will require us to increase our level of productivity.”