The Opposition People’s Party for Democracy and Development (PdP) has declared deep pessimism about the Government’s cash-for-bonds initiative bringing in its projected $153 million for capital works projects over the next 18 months.
PdP spokesman on the economy Scott Weatherhead said that based on the Barbados Optional Savings Scheme’s (BOSS) first month’s performance, if it accomplished even just over a quarter of the anticipated amount “they get a lot”.
This assessment has come two weeks after Central Bank Governor Cleviston Haynes reported that the takeup of the bonds scheme went “reasonably well” in its first month.
In July, only $4.6 million in bonds was issued, representing just over half the overall cap on issuance. Of that amount, $1.2 million was retained by public servants while the remaining $3.4 million in bonds was sold on the secondary market.
Weatherhead told journalists on Friday that based on that first takeup, there was little to no chance of Government meeting its goal of raising about $153 million in 18 months.
Weatherhead joined PdP colleagues Senator Crystal Drakes and Bruce Hennis in a media briefing on Friday to respond to the recent Central Bank report on the economy, while putting forward several proposals.
“The BOSS programme is not likely to raise [$153] million. If they get $60 million, they get a lot. We feel Government will need the fiscal space,” said Weatherhead, as he supported his colleagues’ call for Government to renegotiate its planned one per cent primary surplus target this financial year with the International Monetary Fund (IMF), make “revenue adjustments” and “substantially increase expenditure” to help the most vulnerable over the next six months to a year.
He argued that the BOSS should have performed its best in the first month, adding that based on the projected economic performance the number of people signing up in coming months could dwindle.
“It is the first month you think the majority of the people are going to say, ‘sign me up’. After the first month and the economy doesn’t start to recover, more and more people are going to say, ‘you know what, give me my money back in cash’,” he projected.
“So whatever it is in the first month that is the highest they are going to get. It is going to dwindle beyond that.”
The 18-month BOSS initiative was established by the Mia Mottley administration to help generate economic activity by diverting a portion of civil servants’ salaries to fund capital works.
Senator Drakes lambasted Government’s continued efforts to try to achieve a one per cent primary surplus, which it had recently revised downwards from six per cent following successful negotiations with the IMF.
She said: “Meeting a primary surplus while people cannot afford food and cannot meet their basic needs, will be an exercise in futility.
“The purpose of going through an austerity program such as the Barbados Economic Recovery and Transformation [Programme] and IMF Extended Fund Facility is to allow Government to get its fiscal house in order to improve its citizens well-being.
“COVID 19 has completely changed the social and economic landscape and Government has to undertake significant economic adjustment to respond to the current needs of people.”
She said there was a need for a “massive mindset shift” adding that “we have to fix the problem of implementation deficit and we have to be better at our monitoring and evaluation of projects and programmes.
She said spending on capital works should result in “saving foreign exchange or earning foreign exchange. It cannot be to build roads”.
The Opposition Senator added: “If we are going to spend money on capital works and fix our water problem I have no issue with it because that is a situation where we cannot have in the middle of a pandemic people not having access to running water in their homes. That has been a longstanding problem in Barbados.”