Prime Minister Mia Mottley on Friday declared that the Central Bank of Barbados is not printing money, as she sought to set the record straight regarding that institution’s recent purchase of Government bonds.
Mottley also expressed concern that there were too many people speaking on issues about which they had no knowledge, even as she assured that her administration would continue to provide as many answers as often as necessary to ensure accurate information was disseminated.
The Prime Minister raised the issue in the House of Assembly on Friday while contributing to the debate on the Electric Light and Power (Amendment) Bill.
She pointed to a letter penned by the Government’s Senior Economic Advisor Dr Kevin Greenidge that sought to explain the purchase of Pandemic Bonds by the Central Bank. This, she said, was “seeking to correct the very wrong falsehood that the Central Bank of Barbados has been printing money in this country again”.
“The BOSS [Barbados Optional Savings Scheme] bonds that people bought were bought by ordinary public servants and others who then bought from public servants. It wasn’t a case of printing money, and to the extent that the Central Bank issued securities under the Pandemic [Bonds], it was because they were issuing securities out of money that was converted from Special Drawing Rights (SDRs) from the International Monetary Fund, which is the Government’s money,” Mottley explained.
“But we are now each day and each week having persons making all kinds of spurious allegations. And I get it, because if you can’t find something substantive to talk about then you have to pick something and manufacture it.
“I think that people are maybe speaking sometimes from a position of not being informed sufficiently, or wanting to expose themselves and pull higher in the tree than they might otherwise reach and, therefore, they stretch the truth without realising that the stretching of the truth becomes a falsehood, but I don’t accuse them of any malice or any ill-intention,” the Prime Minister added.
However, she insisted, “what we must not ever allow to happen is for a falsehood to take root”.
“When that falsehood takes root, that is when problems start to emerge, and we see it in the United States of America and across the world now with so many things – the era of fake news,” Mottley said, adding that technology has now allowed “anybody to print whatever they want, whenever they want, and however they want, and very often without impunity”.
Responding to questions from the media during his recent half-year economic review, Central Bank Governor Cleviston Haynes noted that the Central Bank had purchased some $120 million of Government paper up to the end of June. However, he did not specify which bonds were purchased or if the purchase was made with the SDRs made available by the IMF.
Several economists subsequently raised concern that the Central Bank’s purchase of bonds equated to the Government printing money.
However, in his letter, Greenidge made it clear that the Central Bank did not purchase any of the BOSS bonds, and that the $120 million was used to purchase “part of the Pandemic Bonds, but this is not printing money”.
He explained that the money used to purchase the Pandemic Bonds was being held by the Central Bank for the purpose of purchasing those bonds in the first place.
Greenidge explained that Barbados was the recipient of $261.6 million from the overall increased IMF SDR of US$650 billion from August last year, which was provided to help economies during the COVID-19 pandemic.
Noting that it was not a loan and therefore did not have to be repaid, Greenidge went on to explain that the money was lodged with the Central Bank, and under the Central Bank of Barbados Act, the only way for it to be transferred to the Government was through the issuance of a bond and the Central Bank using those inflows to purchase the bonds.
“And, so, the Government issued the Pandemic Bonds for $250 million and the Central Bank used $120 million inflows belonging to Government to purchase some of the bonds. The private sector purchased the remainder. Therefore, this is not new money and, certainly, no printing of money occurred,” he said. “The Central Bank still has $141.6 million of the $261.6 million remaining.”