The Government’s salary-for-bonds scheme known as BOSS, is to be capped to less than $150 million to prevent it from being oversubscribed, Prime Minister Mia Mottley told civil servants today.
She said that while Government is hoping to raise $100 million for capital works from the Barbados Optional Savings Scheme, there is a possibility that figure could rise to between $110 to $120 million based on the high level of interest it has received so far.
She said discussions were still ongoing with the Government debt management unit as to what the final target figure would be.
But she guaranteed that Government would not be going as high as $150 million as it could prove problematic to repay bondholders when those bonds matured.
“In the same way that we took care of the savings bonds we are doing it with this and as much as there is tremendous demand it is appearing, we are still going to cap it at a certain amount because whatever happens we must be able to repay,” Mottley said during the second successive day of meetings with public servants to address any concerns or queries related to the implementation of the BOSS at the Wildey Gymnasium.
“So you don’t just borrow because you can borrow, but we must be able to repay.”
Mottley also promised that Government was doing everything in its power to ensure there was a seamless rolling out of the BOSS.
She admitted while the Central Bank had encountered issues previously related to the issuing of bonds, efforts were already underway to prevent a reoccurrence.
She contended that she did not want a repeat of the inherited TAMIS (Tax Administration Management Information System) used by the Barbados Revenue Authority which was plagued with problems.
The Prime Minister said she expected that everything would be in order for the expected July start date of the BOSS.
“That is what we are going through now but as you know there have been issues in the past with the Central Bank with one or two of the bonds in the past, I think it was the CLICO one, and therefore to ensure that this is seamless we are literally meeting with all of the parties and taking nothing for granted,” Mottley said.
Senior Economic Advisor Dr Kevin Greenidge also assured public servants they would not be disadvantaged.
“The Government is committed to ensuring that this is a seamless transition and of course the only area we envision that we may find any issues is implementation and we want to ensure that that is not the case.
“These last couple of days have been spent explaining the process, getting feedback and buy-in and making sure that we are all on the same page. The next couple of days and weeks will be spent ensuring that we iron out all kinks…Rest assured that all will be done to ensure that this is as smooth a transition as possible,” Dr Greenidge said.
The economist revealed that Government was still working out how bonds not purchased by public servants would be allocated on the secondary market.
He said priority would most likely be given to persons ahead of financial institutions and corporations.
“Beyond the fact that only public sector workers can get bonds from Government in this case directly, we are working with the Central Bank to see how those not purchased will be distributed, because the demand from the financial institutions, corporate Barbados and private sector individuals is so high that we want to find a way whereby the hierarchy of the distribution of bonds should be such that a public sector worker gets preference to get bonds coming out on the secondary market followed by private individuals and then going down like that,” Dr Greenidge explained.
“We haven’t worked out how that will be done yet but the Central Bank and the team is looking at that kind of preference.”
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