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by Anthony Wood
“The Prime Minister, in her consistent view that it should be a case of shared sacrifices and shared benefits in Barbados, wants Barbadians to put their trust once more in government securities for the benefit of the country.” – Nation newspaper July 19, 2022.
The quotation captures eloquently the behaviour of the Prime Minister when it is convenient for her to stir the emotions of Barbadians to demonstrate their patriotism. Her most recent effort is encouraging local individual and institutional investors to purchase government securities in the BOSS Plus programme through which the Government is seeking to raise $200 million per year domestically.
Support for the Prime Minister was given by Ministers Ryan Straughn and William Duguid in the House of Assembly on Friday, August 12th during debate on the second reading of the BOSS Plus (Offer To The Public) Bill.
Should Barbadians participate in this BOSS Plus programme? A number of factors militate against the likely success of this savings scheme.
These include the imposition of the Pandemic levy, the retroactive tax on financial institutions, high inflation which erodes the real value of income, persistently high food prices, high taxes and fees, uncertainty surrounding the future of the National Insurance Scheme and Public Sector Pension scheme, and the mistrust of the Mottley administration resulting from the debt restructuring/repudiation programme in late 2018.
Many local investors in government securities lost considerable sums of money when the Mottley administration engaged in the debt restructuring/repudiation programme. Indeed, the Central Bank, National Insurance Fund, private financial institutions, individuals (and foreign creditors) lost upwards of $3.5 billion.
This unprecedented action by the Mottley administration stunned investors who had purchased government securities in good faith under the Democratic Labour Party (DLP) administration during the 2008-2018 period.
During the election campaign of 2018 Barbadians never internalised the Barbados Labour Party’s promise to “reprofile” the national debt to mean that investors would lose their investments in government securities.
Indeed, the electorate was of the belief that in order to make immediate and short to medium term payments less burdensome on the Government, some of the payments would be made at future dates (relative to the contractual terms) but that investors would be paid in full in due course.
The same administration in less than four years is asking Barbadians to put their trust in government securities once again.
Barbadian investors believed that government securities were safe financial assets when they brought them in good faith under the previous DLP administration. They quickly learnt otherwise through the actions of the BLP administration in late 2018.
The Barbados Labour Party has done precious little to re-establish its reputation and credibility among Barbadians. Indeed, its “tax and borrow, and spend lavishly” policy has engendered little confidence in the economic and financial management skills of the administration. Also, the social, governance and moral decline of the country continues unabated.
Further, the repeated instances of missteps manifested in withdrawn and/or revised pieces of legislation are without comparison to any previous administration.
The existing situation along with the continued hurt and pain resulting from the debt restructuring/repudiation exercise should make Barbadians very cautious about participating in the BOSS plus programme.
