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Caddle defends Government’s spending

by Barbados Today
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Government MP Marsha Caddle has hit back at critics of the Mia Mottley administration’s borrowing, arguing that the debt that has been undertaken was for a good cause and has been able to get the country through the pandemic.

She made the comments during debate in the House of Assembly on Tuesday on the Debt Conversion (Counter-Guarantee) Bill 2022 which will authorise the Government to enter into any counter-guarantee agreement in respect of debt, the proceeds of which will be used for debt conversion transactions for the purpose of environmental, social, and other matters on the island.

The St Michael South Central MP said the narrative surrounding debt on the island had lost focus, with many critics eyeing the large sum of money borrowed from the International Monetary Fund (IMF), rather than seeking to understand why monies were borrowed in the first place and what were they used for, including to stabilise  the country through the COVID-19 pandemic.

She also contended that in many cases, more developed countries had borrowed much than Barbados, based on GDP, to get them through this period.

“I begin with Canada that saw a contraction in their economy between 2019 and 2020 – [they] borrowed 31 per cent of GDP. For reference, I will tell you that the increase in debt in Barbados between 2019 and 2020 was 22 per cent…. That was the increase that we saw as a result of COVID. Canada shrunk 5.4 per cent and borrowed 31, Barbados shrunk 17.1 per cent and borrowed 22.

“France shrunk 8.2 per cent and borrowed 15 per cent. Italy shrunk half of Barbados, 8.9 per cent, and borrowed 21 per cent – shrunk half as much as Barbados and borrowed the same amount. So, not in small island states, not in emerging economies, not vulnerable countries. I can go on and on,” Caddle contended.

The former Minister in the Ministry of Finance, Economic Affairs and Investment, using figures compiled by the Central Bank of Barbados, showed that when compared to the 2007/2008 crisis, the country faced the unprecedented task of steadying itself through a pandemic, and, by all accounts, it did relatively well when compared to most countries in a similar predicament.

Additionally, Caddle contended that the IMF has a track record of providing some of the most favourable interest rates, compared to other international lenders and, as such, still continues to be the best fit with the administration’s current plans for social support and development.

“Let us not pretend that we do not understand why we are developing a new relationship with the International Monetary Fund. We understand why because interest rates are on the way back up globally. Let us lock it in while we can and do the business of the people of Barbados, but let us stop quibbling over this notion of debt, and let us start monitoring the real indicators of people’s well-being and development,” she said.

“How many people are working, how many people are eating nutritious food, how many people are able to start small businesses that survive a three-year period and then a five-year period? I hope with my own intervention that I have been able to give a little bit of my own understanding of what these questions of debt mean.”
shamarblunt@barbadostoday.bb

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