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Economist says attacks on Estwick’s proposal were unwarranted

The president of the Economic Society, Jeremy Stephen, believes much of the recent uproar over the David Estwick plan, which called for Barbados to secure US$5 billion in debt financing from the United Arab Emirates (UAE), was ‘unwarranted”.

In fact, he suggests that Barbados needs to pursue new investment partners, like the UAE, as it seeks to address its debts in the short term.

Speaking during the Association of Certified Chartered Accountants’ (ACCA) inaugural voluntary members’ network event at the Hilton Resort this morning, Stephen also drew reference to a report carried in Barbados TODAY yesterday which revealed that Cabinet had approved a deal that would see heavy investment from Qatar into the stalled Four Seasons project.

He noted that the island was already seeking technical assistance from the International Monetary Fund, but said it was quite clear that, at least before this fiscal year was up, budgetary support would be sought or there would be need for privatization of some state-owned entities. “And we already know about the Barbados [National] Terminal [Company Limited],” said Stephen.

“So we also heard this morning, and they are thinking outside of the box to be honest, in terms of being able to manage their debts . . . , that there was a very integral Cabinet meeting and they agreed to allow some Qatari investors to buy over the Four Seasons project, in addition to local investors.”

Pointing back to the Estwick plan, Stephen said “a lot of people, sad to say, thought that the relationship was unwarranted”. “A lot of slander went around about the type of people it would bring to this country, but in another stroke, a major project that was meant to create a lot of jobs, needed jobs at this time, some assistance is going to be provided from Qatar or investors from Qatar.

“We don’t know whom. But the point behind it is that the Government will have to start to seek, given the rating agency’s [tendency] to have a lot more pull in what we tend to call more developed economies, it would be imperative that the Barbados Government, in the short run, do something that Guyana tried to do . . . and that is finding new investment partners,” he said.

He cited places such as the UAE and others with sovereign wealth funds that did not necessarily depend on international credit rating agencies to guide their investment decisions, as good choices.

“Those are the kinds of partnerships that you will see, and I can guarantee it because it has already happened as I said back when the Estwick debacle was all over the place, it will happen but you will see more of those kinds of investments coming in to help with either (a) the privatization of resources, or (b) some form of support if it is to get Government guarantee off the books, so that your debt to GDP drops and your inherent interest costs can also fall, or it may be what I said earlier, privatization,” explained Stephen.

While stating that it was not necessarily a bad thing for Government to be operating with a debt, he said the Freundel Stuart administration needed to pay closer attention to cash flow.

He expects Government to continue to “underperform”, based on recent figures from the Auditor General’s Report, but warned that it could “exacerbate negative investor confidence primarily within existing investment partnering countries”, including the United States, Canada and some of Europe.

He said the Government should take seriously the Auditor General’s Report and its recommendations, especially when it came to improving efficiency.


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