Deficit reduction measures not aggressive enough – Estwick
Minister of Agriculture, Food, Fisheries and Water Resource Management Dr David Estwick is prescribing a number of remedies to tackle the fiscal deficit.
Dr Estwick told Parliament last night that the Freundel Stuart administration was moving in the right direction in tackling the problem. However, the outspoken minister warned the measures were not “aggressive” enough.
“I am suggesting that we should move at a faster rate towards refinancing and debt restructuring because I believe very strongly that the magnitude of the deficit and the sustainability in regards to debt service cannot effectively be executed given the overall magnitude of the deficit that you are trying to win with and the debt stock,” Dr Estwick said during debate last night on the 2016 Financial Statement and Budgetary proposals.
The Member of Parliament for St Philip West put forward several recommendations, including a consolidation approach, a new low-cost loan and the establishment of a Sinking Fund Commission, which he believed could get the country out of the red.
“The consolidation approach is nothing new, it’s common sense. But the approach to refinancing prescribes that Barbados consolidate its debts or its series of debts into a single debt with an interest rate lower than the average rate of the collected debts that are being consolidated and create a sinking fund,” Dr Estwick explained.
He suggested that a new low cost loan as a certificate of deposit in the bank could accelerate debt consolidation and ease fears that creditors might have about that state honouring its debt obligations.
In his just over 30-minute presentation, Dr Estwick stressed that if any of these approaches he recommended were properly utilized it would “deal with a whole series of negatives in relation to the debt refinancing issues”.
“We have moved in the right direction, but I think we need to move more aggressively in this particular direction and I am confident that once we do this we can effect the level of debt sustainability and fiscal deficit sustainability that we are looking to achieve.
“But it is not going to happen under austerity programmes because austerity on its own cannot effect debt sustainability. When the debt stock is extremely large and the fiscal deficit is extremely large you will implode the economy of the growth side or prolonged the anaemic growth for a long period of time,” Dr Estwick argued.