The cash-for-bonds initiative for public servants, pensioners and private companies – Barbados Optional Savings Scheme (BOSS) – has seen a strong uptake by citizens just over a year after its introduction – signalling public confidence in the Government, Minister in the Ministry of Finance Ryan Straughn has declared.
He told the House of Assembly on Tuesday that up to September 30, public sector workers held about 18 million of the BOSS bonds while pensioners accounted for some 8 million.
Straughn, who was wrapping up debate on the Debt Settlement Arrears Bill, which was later passed, also indicated that just about 16 million bonds were bought by credit unions and about 8.2 million were taken up by pension schemes.
He told lawmakers: “If you combine both pension schemes and pensioners you recognise that just about north of 16 million bonds were bought by the pension sector.”
Six million bonds were owned by private individuals who are not pensioners, three million were owned by insurance companies, while “regular companies and trust companies own two million each”.
The minister’s speech came after a moment of awkwardness and confusion as to whether he was wrapping up the debate on the bill, which was introduced last week, or if he was introducing a substitution to the original and moving a second reading or seeking to “amend in committee”.
It was later agreed that Straughn was “wrapping up the debate” and he would give an update with respect to Government debt and the performance of the BOSS initiative.
“We have actually indeed seen quite a bit of take-up [of] those bonds across a whole range of economic agents, which is something we have to appreciate is still a part of being able to deliver greater returns in the context of what clearly is a very shallow financial and capital market in Barbados,” said Straughn.
“So there is a wide set of ownership with respect to persons who have actually participated in the BOSS programme and the extent to which I see that is confidence in what government has put into the market. I see that as something we can all be proud of because at a time we needed to be creative to help spur and finance capital work in a modest way I can say Barbados has stepped up institutionally as well as individuals to be able to assist in participating in the BOSS programme.”
BOSS, which took effect in July 2020, allows public servants to agree to have a portion of their pay converted to bonds over an 18-month period. It also applies to pensioners.
Companies and the wider public were also able to buy the bonds from public servants through the Central Bank or a broker.
Under the scheme which is aimed at raising just over $150 million up to January next year to help fund capital projects, bondholders will get a five per cent interest rate that is payable twice per year. The bonds will mature after four years.
Straughn said the performance of the BOSS bonds was an indication that Government could soon “dip its toe back into the bond market with respect to the issuance of regular treasury bills, savings bonds or any other debentures we did in the past”.
Recalling that the BOSS bonds were issued to help fund capital programmes, helping Government to achieve its six per cent primary surplus target at the end of fiscal year 2019/2020, the Government is now facing a situation of reduced revenues and increased spending as a result of the COVID-19 pandemic and needed to close that gap, he said.
Straughn used the opportunity to encourage Barbadians to “observe the public health protocols and get vaccinated” against the coronavirus, saying this will be “a critical part of how we are able to ease some of the financing pressures off government”.
With this ease and more people getting back to work, Straughn said this also meant further relaxation of the COVID-19 related public health directives.
While the prospect for the economy “looks better for next year”, he said, “it can only come to fruition if citizens participate and allow us to get to that stage”.
marlonmadden@barbadostoday.bb
