Prime Minister Mia Mottley is defending the Barbados Optional Savings Scheme (BOSS), saying it will help the country to emerge from its economic doldrums and she believes the uptake of the bonds will be “reasonable”.
But Opposition Leader Bishop Joseph Atherley has raised several questions, while insisting that the bonds scheme was a pay cut in disguise.
Their comments came as the House of Assembly debated the Barbados Optional Savings Scheme Bill in Parliament on Tuesday. The BOSS programme is to take effect from next month and allows public servants to agree to have a portion of their pay converted to bonds over an 18-month period.
Pointing out that this year will be a “rough” one for the country, Mottley said unemployment could easily be estimated at about 30 per cent currently and with a dramatic increase in government expenditure of about 21 per cent and a reduction in revenue of some 31 per cent, as a result of the COVID-19 pandemic, the country was in need of urgent resuscitation.
“This is going to be a rough year but a year I know we will succeed in getting through,” said Mottley, who indicated that additional adjustments would be made to the Barbados Economic Recovery and Transformation (BERT) programme if necessary.
“It is going to be a difficult year, but it is a year that will not daunt the spirit of the Barbadian people nor allow us to feel as though it can get the better of us,” she said, adding that the BOSS programme “will get this country back on its feet”.
The Barbados Labour Party leader insisted that under the BOSS programme public officers, members of Parliament, members of the Senate and government consultants had the option to “opt in or out, fully or partially, zero or all”.
Under the scheme aimed at raising approximately $153 million over the next 18 months to help with capital projects, Government is giving public servants earning above $36,000 annually, the option of obtaining the special bonds.
Pensioners and public servants earning under $36,000 per year will also have the option of purchasing the bonds, which will attract five per cent interest.
“What we have tried to do with the help of the labour union movement is to craft something that meets our needs as a Government, which is to create the additional economic activity for those who have lost their jobs in the private sector, allowing the country to build capacity,” said Mottley.
“We are not sitting down twiddling our thumbs. We are building the capacity so that when the world is fully functioning again they will meet a Barbados that is much stronger, much more agile, much more capable and much more impressive in terms of what we have been able to do while others have been sleeping,” she said.
Mottley said there has already been tremendous buy-in from the membership of labour unions.
She suggested that the credit union movement, whose $74.22 million in debenture were affected by Government restructuring almost two years ago, was also interested in purchasing the bonds, and so too were public servants who have indicated they would purchase from their colleagues.
“We anticipate that the uptake will be reasonable,” she said
Insisting that the BOSS was not a pay cut, Mottley said “For the avoidance of doubt, this legislation is not constrained by any other piece of legislation under the law of Barbados. It is also being passed consistent with Section 49 of the Constitution.”
“All we are doing now is asking the population to do what you can, how you can, if you can, to help us become fitter, stronger, more disciplined and creative. In a sense, this is why we are choosing to focus on structural changes that will build up that capacity,” said Mottley.
The PM again hinted at the introduction of a National Pandemic Solidarity bond which could be introduced to individuals who are not public servants but wanted to participate in a bond offer other than BOSS.
However, in a presentation that was interrupted several times, Atherley who was also jeered at times, insisted that the BOSS offer was a way of cutting the wages of public servants.
“Inflation rate in Barbados today is over four per cent and likely to trend up in the next few years, so what you earn today becomes subject to inflationary pressures down the road. A cut is still a cut,” he said.
“What this bond issue amounts to is an attempt by the Government to borrow from public servants with a promise to pay with interest a few years from now. Where does the Government get money to pay its debts in Barbados principally? . . . In four years from now when they have to pay it they will tax you to pay it. A cut by any other name is still a cut,” insisted Atherley.
Stating that he was seeking to “paint the fuller picture” about the scheme, Atherley also demanded clarity on the Central Bank’s involvement.
According to Section 13 of the Act, the Central Bank is allowed to purchase bonds and trade them.
“It (the Central Bank) is helping Government to meet the recurring expenditure vis-a-vis a portion of public servants’ salary . . . This is a backhand way of printing money,” said Atherley.
“I want to know what would happen if these bonds are not taken up out there on the market. I want to know how civil servants are going to be paid if these bonds are not taken up. The ultimate responsibility then is reposed with the Central Bank to honour central government’s liability to public servants. That is a real danger. It is not just about printing money, but it is a real danger if these bonds are not taken up.”
Atherley said while Government has given the assurance that the bond would not be restructured, he questioned to what extent it would be protected.
“Can a bond be deferred in terms of payment at its maturity date and it is considered not to have been restructured?” he queried while questioning why the maturity of the bond was set at four years, a year after the next general election was constitutionally due.
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