#BTEditorial – We have been on this road before

The current administration made the matter of transparency its mantra long before it was swept to office in the most historic electoral win the country has witnessed.

Some may argue that it was the lack of transparency by the former government that was its undoing, while the promises to be open and upfront with the people of this country won the approval of Barbadians and confirmed their desire to have a change in the management of this country.

There is no one who can legitimately argue that Barbados is not in a far more desirable place than it was just over five years ago.

The country has been pulled back from the economic precipice at which we stood when the country’s foreign reserves plummeted to dangerously low levels. Our debt to gross domestic product (GDP) ratio has come down from the high that left us unable to find borrowers on the international market who did not demand loan-shark interest rates because the country was regarded as high-risk.

There is no need to remind our readers also that downgrades by international rating agencies such as Standard & Poor’s, Fitch, and Moody’s had become a common feature in the local and international news. The country sunk to junk status after the longstanding and prized investment grade rating was systematically ripped from us with every successive downgrade.

That was the economic status of Barbados as the former administration put its head in the sand and failed to concede that it needed outside help in managing the economic and debt crises that besieged the island.

It would be nothing short of hypocritical to offer grudging approval of the way the Mottley administration has handled the restructuring of our national debt with the oversight of the International Monetary Fund (IMF). The medicine was tough, there was collateral damage; a limb might have been lost but the body was saved!

There are always two sides to a story. Running a country is not a fairy tale production. We will not all live happily ever after. The consequences of the debt restructuring have been the serious undermining of confidence in government debt instruments. A situation that was unheard of prior. Government bonds and Treasury Bills were seen as “virtually risk-proof”.

Investors are still dipping their toes in the water. One major vote of confidence came from CIBC FirstCaribbean with a major purchase of $100 million in BOSS+ Bonds earlier this year.

However, the disclosure that the government intends to seek almost $1 billion in foreign borrowing during the 2023-2024 financial year, with most of it coming from the IMF, has left many people wondering whether we are biting off much more than we can chew.

The Medium Term Debt Management Strategy prepared by the Debt Management Unit (DMU) of the Ministry of Finance, Economic Affairs and Investment and which has been posted online on the Barbados Parliament website, has left us to believe that there are still some deep issues with the government’s financing.

Since there was no announcement prior to the reporting by a member of the local media, we are left to believe that the administration was awaiting an amenable time and place to address the issue.

“Barbados’ 2022-2023 to 2024-2025 debt management strategy that was predicated on an increased use of domestic and external commercial funding did not materialise as envisaged,” the DMU document noted.

This is an important statement because it is representative of the tepid support of Barbadians to the accumulation of significant foreign debt. They fully understand the risks because we have been on this road before. There are no crystal balls to help us determine what the future holds and citizens are understandably wary about high levels of national debt and our ability to repay money owed in US dollars as will be required.