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Funds to keep businesses afloat

by Marlon Madden
4 min read
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With about a third of the workforce now claiming unemployment during the COVID-19 pandemic, a Government Minister is stoutly defending a decision to assist businesses using the Catastrophe Fund.

Minister in the Ministry of Finance Ryan Straughn insisted that Government had to take steps to “re-engineer” its resources to ensure that the majority of those currently displaced due to COVID-19, were back on the job in a relatively short time.

As of Friday, there were some 42,797 unemployment claims by individuals who were displaced due to the pandemic.

Straughn, who was leading off the debate on the Catastrophe Fund Bill in Parliament on Tuesday, described the COVID-19 global pandemic as perhaps the most devastating natural disaster that has happened to mankind.

He said Government’s decision to therefore introduce a new Act to govern the Catastrophe Fund, which was first legislated in 2007, was to simply help businesses survive the pandemic and be able to hire people.

“I want to make it clear to the country that what we are doing here today is not in any way to disadvantage any person in the country. It is not in anyway to take away from the fact that we will still continue to build the Catastrophe Fund, and for the very reasons we are making these amendments today is because we need now to ensure, as much as possible, that as many businesses can survive in this country [and] continue to employ persons,” explained Straughn.

The new-look $50 million Catastrophe Fund, will provide financial aid to eligible self-employed individuals and qualifying businesses affected by a catastrophe.

While there was a previous Act governing the Fund, which is funded by a 0.1 per cent of employee’s insurable monthly earnings, there has been a broadening of the definition of catastrophe in the new Act to include a pandemic, breach of cyber security and act of terrorism.

A month ago Government announced that the fund would be used to keep businesses afloat in the form of a new $40 million VAT Loan Fund.

Since that announcement, Opposition Leader Bishop Joseph Atherley and his team, as well as President of Solutions Barbados Grenville Phillips have voiced concern about the Catastrophe Fund being used to provide the one-year interest-free loans to businesses.

However, Straughn dismissed those concerns today, stressing that the move was only one of several initiatives designed to allow for greater cash flow for businesses to quickly get unemployed people back into the workforce.

“The Government’s responsibility is to ignore those cries and focus on channelling and getting everybody focused on what the solution is,” said Straughn, as he promised continued engagement with stakeholders.

He said: “We are not taking the money and just giving it away. We have put some measures in place to improve the cash flow for businesses outside of any other mechanism they may employ from the bank or financial institutions, to ensure we can keep as many businesses afloat as possible.”

He said while he expected some people to disagree with the use of the fund to help businesses, Government would do what it could to help as many people as possible to keep their “heads above water”.

“Therefore, I say to Barbadians yes, the next few months, the next year will be tough, but we have crafted a response that is as inclusive as it can be in the current circumstances and while I know some may wish to criticise and they are free to criticise, at the end of the day our mission is to ensure that ordinary Barbadians can keep their heads above water,” said Straughn, who also dismissed objections to the newly-introduced Barbados Optional Savings Scheme (BOSS).

Straughn also used the opportunity to reject suggestions that Prime Minister Mia Mottley should trim her 26-member Cabinet, saying the country should judge Government on the basis of its performance and not the size.

“It is important that the country focuses on what is required to get everybody out of this hole rather than focusing on who they think should be tossed aside. The Government’s response is to keep every single Barbadian household afloat during this time so that we can all come out of this together and the reality is that it is going to be difficult,” said Straughn.

The National Insurance Board is responsible for the management and investment of the Catastrophe Fund, and two committees will be established – the Physical Catastrophes Committee and the Economic Catastrophes Committee – for the consideration of and assessment of claims and granting of financial aid.

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