Barbados is in a much stronger financial position than it was in 2018 when the former administration was given its walking papers by the local electorate.
That is a fact that is borne out by the numbers. We have emerged from a state where we were unable to access major concessional financing, not even from the Caribbean Development Bank (CDB) unless it was under the strictures of policy-based loans.
We were spending most of the income generated on loan repayments, which resulted in little or no capital to finance infrastructure, support the provision of adequate public services, and to meet commitments such as the payment of income tax refunds.
On the other hand, it has been argued that had the former administration bitten the bullet and sought the intervention of the International Monetary Fund (IMF) much earlier, there could have been better outcomes for citizens.
It has been suggested that the Freundel Stuart administration was paralyzed by possible negative public perceptions about entering an IMF programme and its implications for the party at the polls.
But we have come a long way since then. We have managed to access hundreds of millions of dollars in financing after entering the IMF-approved Barbados Economic Recovery and Transformation (BERT) programme.
In addition to the low-interest loans from the IMF, the country has secured the confidence of other lenders to the point where more than $1 billion has been secured from lenders.
It has shored up our foreign reserves and provided a buffer for a number of unplanned crises including the COVID-19 pandemics and two acts of mother nature.
No one complains about having too much money. The more the merrier. The concern that many Barbadians are expressing, is the country’s ability to repay these long-term loans.
This position is not out of character with Barbadians. We have a history of being risk averse. We often contemplate the “what if . . .” before putting our feet in the water.
And it is not just the average man in the street who is worried about the island’s rising debt level. Economists have challenged the idea that the financing secured so far is going towards productive projects that will themselves generate the kind of economic activity needed to support the level of loan repayments required in years to come.
In fact, there have been repeated calls for government to step up its capital works projects to drive economic activity.
Some have quietly worried about the ratio of foreign to local debt and the pressure that will be exerted on the economy to generate the amount of foreign exchange required to service these loans.
As a consequence, there is a level of ambivalence about whether the island should enter another programme with the IMF when the current arrangement finishes at month-end.
Prime Minister Mottley has confirmed in her address to the nation that even though the island had made many strides, battled through several crises, and had not suffered a single downgrade under her watch, we were not out of the woods.
As she revealed, Barbados requires another round with the IMF to provide cover during these uncertain times. As she put it, the renewed relationship with the IMF will unlock more than $300 million in new financing.
More money will become available, which the country needs. However, it results in more than a quarter of a billion dollars added to the country’s debt load.
The high level of debt, along with questionable management decisions by the former government led the country to the point where the Mottley administration had to enforce a voluntary debt default as part of the restructuring process of 2018/2019.
While the decision brought the country back from the economic precipice, the debt restructuring has seriously hurt the confidence of the local market for government paper.
Once the most reliable investment instrument, government bonds and other paper are receiving a lukewarm response from potential investors – some of whom were burnt by the last restructuring exercise.
Regaining the confidence of Barbadians will take more than the appeal of politicians for the public to buy the BOSS bonds because the country needs them to do so.
People must see the economy roaring again with significant projects taking place, and a buoyant job market with sustainable employment.
The economy may have turned the corner from when the bottom fell out in 2020 but citizens want to feel that growth in their own lives to restore their confidence in the future.
