The Barbados Co-operative Credit Union League (BCCUL) has given its support to Government’s Barbados Optional Savings Scheme (BOSS).
Hally Haynes, president of the BCCUL, the representative body for credit unions on island, said the decision to take the option was left up to each member but the League felt a credit union member who opts to have a percentage of his salary in bonds was unlikely to be worse off than if they received all in cash.
The BOSS initiative seeks to reduce Government’s wages bill by offering civil servants and those employed by state-owned entities a percentage of their salaries converted into four-year bonds for which they will receive five per cent interest. They will be allowed to trade them through the Central Bank of Barbados to entities or individuals in the private sector who may wish to purchase.
Haynes, who joined a recent radio call-in programme discussion on the subject said: “We have to look at the features of the Barbados Optional Savings Scheme and when we look at the features, we realise it’s a four-year bond, short term, five per cent interest, interest paid every six months, no withholding tax on interest earned, it is fully tradable, it is guaranteed not to be restructured by the Government, and it has an early redemption clause after 24 months.”
In those circumstances, Haynes added: “If the public worker who is a credit union member has a loan . . . that worker can take that bond to the credit union, use that bond to pay his loan commitment or mortgage . . . so he has not lost his position. He is in the same position as if he had received 100 per cent of his salary in cash.”
“The member will not be worse off if he trades the bond through the credit union and gets back his cash.
“In doing so, what will happen is that the credit union will earn interest of five per cent over the period of the bond. And the way credit unions operate that interest earned is part of the revenue at the end of the year, that same member who sold the bond to the credit union will still share in the surplus either by way of dividends or interest paid.
“When we look at it overall, it is a question of options. Everybody has to examine the proposal and make informed financial decisions as it relates to the bond. We have been in consultation with the entire membership and we will be there to guide and give any information that is necessary,” Haynes said.
While Government continues to face challenges from Opposition Senator Caswell Franklyn about the legality of the initiative, its chief economic advisor Dr Kevin Greenidge says Government needed to create a “$100 million fiscal space” for capital works programmes to “mop up” some of the more than 41,000 jobs that have been lost in the private sector due to the COVID-19 pandemic and kick start more economic activity on the island.
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