No impact from suspension
Contrary to recent doom and gloom pronouncements by Opposition parliamentarians during this week’s debate in Parliament of a “no confidence” motion against Minister of Finance Chris Sinckler, Governor of the Central Bank of Barbados, Dr. Delisle Worrell told a news conference at his Bridgetown office this morning, that the suspension would have “absolutely” no impact on the economy.
“The bond issue was not part of the fiscal strategy. The fiscal adjustment was crafted to achieve the objective of restoring balance in our external accounts, bring our expenditures down, to what we expect it to come, in terms of our foreign exchange,” pointed out Worrell.
He noted that the fiscal deficit was accepted by all, after full consultation as being adequate to that task.
“The bond issue was an additional insurance which we expected when we first contemplated it. We first looked into the possibility of raising a bond when we visited with investors in April of this year. And when it was first contemplated, interest rates in the international bond market, were very attractive,” added the governor. He said that, with the rates of about six and a half percent, it was felt the country could raise the bond at that time.
“So we thought it made a lot of sense, to top up our reserves in view of the prevailing uncertainty, by adopting a strategy which would enable us to achieve a size of bond, where we could have attracted that rate of interest,” Worrell reasoned.
He explained that by the time authorities here had made up their minds that it made sense to float the bond in view of the previous favourable conditions, it was discovered the price had gone up.
“And so, when we realised that it was becoming an expensive proposition, we said, this is an optional extra . . . this is a little extra insurance, it is not something that we absolutely need, and therefore it doesn’t make sense to proceed, until market conditions returned to something that makes it more reasonable. If they never do, we would just not bother,” the Governor told the news conference.
The leading economist went further to insist that Barbados did not even need to seek other options to “replace” the bond because it already has insurance.
“The high level of foreign reserves that we have, that is our main insurance; so we already have all the insurance we need,” Worrell stated. “If it had been possible,” asserted the Central Bank governor, “at reasonable cost, to add a little extra insurance, extra insurance is always a good thing in uncertain times, then that would have made sense. It doesn’t make sense in the current uncertainty.” (EJ)