Prime Minister Mia Mottley has dismissed concerns raised over the country’s ability to repay a massive International Monetary Fund (IMF) debt in a seven-yeartime span, saying the country had the capacity to fulfil its obligation.
Mottley suggested that her critics were using the total $928 million to be repaid, to excite, and were speaking without context.
Her response to the ongoing debate came as she was addressing the launch of Selected Papers and Speeches of Alister McIntyre – Caribbean Trade, Integration and Development – at the Errol Barrow Centre for Creative Imagination (EBCCI) tonight.
Mottley responded to critics who have raised concern in recent days that Barbados was in a precarious debt situation.
On Wednesday, senior economist Anthony Wood told Barbados TODAY that he had reservations about the island’s ability to repay the debt.
During the course of the BERT programme, government borrowed some $870 million.
“Without appropriate economic and financial policies over the short and medium term to return Barbados to a sustained growth path, with tourism and other foreign exchange-generating activities yielding very good results, the country’s ability to service the IMF and other external loans will be seriously compromised,” said Wood.
However, without naming anyone, Mottley expressed disappointment that some people were speaking without context.
“More and more as I read sometimes the newspapers, I wonder if people have lost perspective and lost context,” said Mottley.
“To hear that $900 million from an IMF programme is something that will cripple a country when that constitutes a mere 6.4 per cent of its debt, and at no stage [would] garnish more than 4 per cent of the revenues in servicing the debt, tells me that that figure has been used to excite persons without context, because if context was placed then you would realise that amount is not only one of the smallest amounts, but that the capacity to service the debt is more than manageable,” said Mottley.
Explaining the reason behind most of the borrowing from the IMF under the BERT programme, the Minister of Finance said that the debt incurred helped to prop up the island’s social system during the height of the dreaded COVID-19 pandemic.
Mottley said: “If you look at it from the perspective that the debt was used to be able to secure from buses to transport people home near and far, to garbage trucks, to equipment to deal with roads, to a whole range of things, then you have context and perspective.”
The prime minister told the gathering that the region was involved in a “relay race of development”, noting that the work of McIntyre was as relevant today as it was several decades ago.
On Tuesday retired university Professor of Economics Michael Howard also weighed in on the situation, arguing that Barbados had been placed in a debt trap. The academic
said with the volatility of the global market, high costs of imports and an overvalued 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. 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.
marlonmadden@barbadostoday.bb
