Checking our debt problem
The economic affairs of the country will be discussed this week If a nation’s debt isn’t spurring economic growth, it is hindering it. If the economic cost of debt is more than the economic benefits, then it just may be a problem.
For example, Greece and Japan have astronomical levels of debt and thus are barely growing, as the countries pay an inordinate amount in interest payments. At some point, someone (the world) is going to realize that what those two countries are doing is unsustainable.
Also, Greece has, or had European Union backing to address its debt. Japan, on the other hand, has a unique and large economy with a reserve currency (held by multiple central banks around the world) and has special drawing rights with the International Monetary Fund to boot. This means that Japan’s ease of borrowing will be higher, relative to the majority of the world whose currencies aren’t sought after nearly as much as the yen is However, I expect both Greece and Japan to eventually default. It is more a question of when will those countries default, than would they?
Barbados’ debt is thankfully more manageable than that of the two other countries mentioned. Unfortunately though, Barbados’ currency isn’t a reserve one, and also Barbados has no backing from a large counterparty ready to loan us money to pay our debts (as with Greece).
Perhaps, a better example to use when looking at debt realities would be the contrast with Jamaica. Jamaica went straight to the International Monetary Fund (IMF) to access funds. That is why
it is imperative for Barbados to manage its debt and for the public to tune into the discussion of our affairs if we don’t wish to go to the IMF.
The Nordic countries at the top of Human Development Index (an economic indicator of well-being and living standards) have low government debt. The Nordic countries are in stark contrast to all the other countries previously mentioned with their debt to GDP ratios being (Greece at 177 per cent, Jamaica 132 per cent, Japan 230 per cent) in 2014. The Nordic countries are undoubtedly where Barbadians wish to be; we all want a high standard of living. For example, Norway’s debt to GDP ratio was 26.4 per cent in 2014 and Switzerland’s was 34.2 per cent in 2014, whereas Barbados’ debt to GDP was 103 per cent as at March, 2015.
Barbados Budget. The Government will be discussing the country’s Budget, as presented by Minister of Finance Chris Sinckler, and apportioning the goals for the year for the family. It is at the best of times a thankless job, with our leaders trying to keep as much money (foreign reserves) within
the country while trying to keep everyone happy. Barbadians will have listened
to the Budget to tick off the following on our checklist:
Barbadian dollars are still pegged at the exchange rate of BDS$2 to US$1.
My job, business, pension will not be impacted negatively.
New taxes, or concessions To do your part and “keep money circulating within the Barbados and Caribbean family”, support businesses that produce goods or services locally or regionally.
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