“Foolishness”, DLP says of reason given for not paying back NIS debt

The Democratic Labour Party (DLP) has hit back at Special Envoy to Prime Minister Mia Mottley on Investment and Financial Services Professor Avinash Persad who suggested that it would be disastrous for the Government to repay the $1.3 billion debt to National Insurance Scheme (NIS) which it wrote off during the 2018-2019 debt restructuring programme.

In an article in Barbados TODAY, Professor Persad warned that if the Mottley-led administration heeded the calls from the DLP and others to repay the money, it would be tantamount to reversing the debt restructuring programme and putting the Barbados dollar at risk.

“It means [putting] the dollar back into jeopardy and [putting] debt back at 178 per cent [of Gross Domestic Product]. That just doesn’t add up. I think it’s just trying to score political points without making any economic sense,” he said.

However, in a strongly-worded response, DLP president Dr Ronnie Yearwood dismissed Persaud’s statements as “foolishness”.

“What Mr Persaud said about the effect of the $1.3 billion write-off of NIS, our money, and that Government shouldn’t pay it back, is the type of foolishness you would expect from highly paid consultants masquerading as economists and professors,” he told Barbados TODAY in a specially prepared statement.
Yearwood pointed out that a debt restructuring exercise could take on many forms and have many aspects.

“The vast majority of government debt restructured in 2018 took the form of the Government lowering the interest rate and taking a longer time to pay back the loan, but the principal on the loan was still to be paid back. I want to remind Barbadians that in the case of the NIS, $1.3 billion owed by the Government to the NIS was written off totally – the principal, interest, nothing will be paid back,” he contended.
The DLP leader argued that the NIS lost twice because the remaining debt that was not restructured now has lower interest rates and a longer payback time.
“The $1.3 billion written off had a major impact on the [NIS] Fund and reduced its viability and sustainability. It is that $1.3 billion that we are asking to be repaid to NIS over time. The Government is borrowing and spending money on various things that it deems important and politically advantageous. Why can’t it make paying back the NIS a priority?” Dr Yearwood queried.

Persaud had contended that paying back the money would also threaten the living standards of Barbadians and place the social security assets in a much worse position.

“It is just ridiculous posturing…it is political posturing. Of course, we all would love not to have had a debt restructuring, and every single person who experienced a loss from the debt restructuring would have a cause that they should have been saved, but it only meant that others would have suffered more.

“Unfortunately, it had to be as broad as possible. If it were not broad, it would have to be concentrated on all the others…all the private pensioners. We would not have done enough to save the dollar. If it was easy to save the dollar, it would have been done before,” the investment and financial services consultant contended.
(EJ)