A retired university Professor of Economics is warning Barbadians that the Mia Mottley Administration has placed the country in a debt trap that will be difficult to get out of in the foreseeable future.
In a no-holds-barred interview with Barbados TODAY, former Head of the Department of Economics at the Cave Hill Campus of the University of the West Indies (UWI), Professor Emeritus Michael Howard, said Barbadians don’t seem to understand the true state of affairs in which they have been placed.
Professor Howard has suggested that the Government needs to come clean about the real level of its spending and debt, arguing that its forecast for settling the $815 million debt to the International Monetary Fund (IMF) by 2027 is unrealistic.
“I do not fully understand how we are supposed to pay it back, over $800 million. I don’t know how we propose to pay it back when that time comes. We don’t really have any resources to pay back debt, so it is going to be a problem. That was my biggest concern that we are in a type of debt trap because everything you want to do you have to borrow in order to generate income and jobs,” the senior economist contended.
“It is really difficult for me to say that it is going to be an easy path for Barbados in terms of paying back debt in the future,” the former Head of Economics at the UWI declared.
The academic said with the volatility of the global market, high costs of imports and an over-valued exchange rate for Barbados, it would be difficult to predict how soon the debt could be repaid.
“I really do not know what timeline one could identify to pay back a debt of nearly $900 million. It baffles me really,” Professor Howard stated.
“Over time between now and 2030 you are going to be borrowing more money in order to maintain the economy because we do not earn as much foreign exchange from tourism as we would like. I think it is a problem for the officials. People sometimes like you to ‘soft soap’ and say nice things, but we are in a debt trap,” he stressed.
The top economist also suggested that this country will have to extend the IMF-funded Barbados Economic Recovery and Transformation (BERT) programme which expires in September this year.
Turning his attention to the options available to Government, Professor Howard thinks that over time, the Mottley Administration needs to embark on less ambitious developmental programmes.
“Rather than trying to build 10,000 houses, I think we have to find a way of not doing so much, but providing the people at the bottom, the lower-income groups with things to cope and survive,” Professor Howard said.
He is of the view that a development programme has to be set up to identify sources of income and the amount of money Government proposes to spend over a period of time on certain construction work.
“Right now, I don’t get a good impression on how much the Government is spending, how much it is borrowing, what exactly are its plans in terms of its accounting framework being used,” Professor Howard told Barbados TODAY.
He contended that the IMF could be a valuable source of much discipline. “I think the discipline imposed on the Government would be good for Barbados. Left to their own, I think this Government will spend a lot of money and then look to borrow money from somebody.
“So I think the IMF will impose a level of discipline which is required on the Barbadian Government in terms of putting down these programmes and making them more achievable within a certain framework,” he noted.
However, Professor Howard admitted that fiscal discipline comes with “a little” hardship.
“Bajans need to be told you cannot get things easy all the time and to go through all of this you have to exercise discipline and reduce spending on a lot of non-essentials. Even in this Crop Over, there is a lot of spending on costumes. There is also a need to get discipline on your own consumption spending,” he urged.
emmanueljoseph@barbadostoday.bb
