Priority # 1

Arthur urges Stuart to make an urgent call on the economy

Put aside the election talk and let’s come together for the sake of our country’s economy.

This was the strident appeal made Wednesday by former Prime Minister Owen Arthur, who is now warning that urgent action needs to be taken within the next three months to stave off the threat of a currency devaluation.

With the country fast running out of foreign reserves and the Central Bank recently forced to put the immediate brakes on the printing of money, Arthur cautioned that now was not the time for political leaders to be engaging in rabid electioneering.

In fact, he suggested that the only thing that Prime Minister Freundel Stuart needs to urgently announce is a “national consensus” on the ailing economy.

“The time has come for a national consensus, that the Prime Minister tries to generate, as to how we are going to address the expenditure adjustments that are required,” Arthur said.

“The reality is that the exchange rate is the price that you pay for foreign exchange – two Barbados dollars to one US – and that you can maintain that price if you can guarantee or assure that there will be enough foreign exchange to meet the demand for foreign exchange as it falls due.

“Now in Barbados’ case the Central Bank, as recently as in 2008, had $1.5 billion in foreign exchange reserves. They have been plunging, and plunging precipitously, down to the point where we now have about $600 million and Barbados now has less foreign reserves than [US president Donald] Trump has,” Arthur lamented.

He further cautioned that if the current slide continued unchecked, by June the island’s foreign reserves could be fully depleted, putting the Barbados dollar in greater peril.

“In these matters, you have to talk the country through it and it isn’t so much when the election is called, but our leaders need to start talking to the people about what the country faces, get them to understand what is before us, and build a consensus as to how to deal with it,” Arthur told Barbados TODAY, while insisting that the matter was more pressing than elections.

He also warned both the ruling Democratic Labour Party and the Opposition Barbados Labour Party that even as the constitutional deadline for elections approaches, it was not enough for them to simply assure members of the electorate that “we will not devalue the currency” as they try to “keep the spirits of the troops high”.

In fact, he cautioned that though the required change was neither wanted nor desired, “it was about what is going to be forced upon you.

“What matters is if you run out of foreign exchange and you don’t have anybody else to borrow from. That is the objective reality,” he said.

“So in my view it is not so much whether you can have elections or not, because unless we stop the process that is causing our foreign exchange to drain away, no matter when the elections are called that is still going to be before you.”

Arthur, made it clear devaluation should be avoided at all costs, as he drew a comparison between the current economic reality facing Barbados and that which faced Jamaica in 1976 on the eve of Jamaica turning to the International Monetary Fund.

He said back then the Jamaican currency was almost on par with the US dollar, but the Jamaican authorities had refused to accept the economic advice given for them to stop printing money.

Since then, the value of that country’s dollar has deteriorated to the point that it now takes 128 Jamaican dollars to purchase one US dollar.

Arthur also pointed out that at one point only three Guyanese dollars were required to purchase one US dollar. However, he said the country went on a similar “printing binge” which simply ‘catspraddled’ the Guyanese currency.

“An exchange rate adjustment has shown to be very disruptive; so if you can maintain a stable rate, try to do so,” the former minister of finance advised, while pointing out that Barbadians were already facing difficulties in accessing US currency.

He cautioned that while Barbados’ situation may not yet be as desperate as that which faced either Jamaica or Guyana,  “we are going there because [in addition to the pressure on reserves] the things you are depending upon to stop the slide are not happening, namely, bumper tourism and a lot of capital inflows.”

He also pointed out that “the Government of Barbados cannot borrow a lot of money from the local banking system because they have reached their prudential limit . . . you have used as much national insurance as you can. The Government, because of the downgrades, can’t borrow money from lending institutions and investors in pension funds because they have a duty of care not to put their funds in things that are not investment grade.”

In such a situation, Arthur said local trade unions have to be made to understand that their workers become worse off if we have to go down the devaluation route.

“So everybody has to understand what the situation is and what is expected of all of us to get out of it,” he said.

Asked about his own role in achieving national consensus, Arthur said though he was prepared to be part of a serious process, he would not allow himself to be “treated like a mock stick”.

He recalled that in 2014 he was approached by Minister of Finance Chris Sinckler to be chairman of the National Economic Council and then nothing happened.

Similarly, he said, “Mia Mottley once committed me against my will to be head of an eminent persons group that nobody ever said they wanted . . . . So I am prepared to be part of a serious process, but I am not prepared at my age, at this stage in life, to be made a mock stick of by either of the two political parties,” Arthur stressed.

14 Responses to Priority # 1

  1. NOLAN HALL February 9, 2017 at 2:27 am

    Owen Arthur

    “The Government, because of the downgrades, can’t borrow money from lending institutions and investors in pension funds because they have a duty of care not to put their funds in things that are not investment grade.”

    Frundel Stuart

    “what they say has as much value as what you would see in any garbage dump collected by the Sanitation Services Authority (the island’s thrash collection agency).”

    With this mindset by the Prime Minister, i wish Owen luck with his call for a national consensus.

  2. ch February 9, 2017 at 5:46 am

    Mr. Arthur is right. The people of Barbados have to demand this process and stop playing politics with our economy. A real leader knows when to put his people and not his pride first. Now is the time.

  3. Michael Brace February 9, 2017 at 5:51 am

    I have been saying this for the last two years, when nations find themselves in this precarious position they should put politics aside and bring they sharpest minds together to solve the problems. This goes especially for the USA which is a very divided country and getting more divided by the day.

  4. Patrina Drakes
    Patrina Drakes February 9, 2017 at 6:42 am

    15 15 Get a coaltion goverment no one party is majority so they have to work together to get anything done Barbados wins

  5. Tony Webster February 9, 2017 at 6:49 am

    Given the well-established, action-oriented, caring, demeanor of this government, and their propensity to deal with major issues with competence, courage , and alacrity, the very LAST thing they need now, is an excuse to postpone elections until the very last two days allowed by our constitution…. AND having been given a few tips from her Majesty’s Loyal Opposition, they could then share-out the blame from failing to execute the necessary changes…onto the opposition’s heads!

    The one thing that is urgently required now, is for the Sleeping One to wake up…and ring the bell.

  6. Peter February 9, 2017 at 7:55 am

    Reality is the order of the day. Fruerndel WILL NOT call elections before the absolute constitutionally due date. and this is from the command center in George Street. Remember arrogant Arthur and How he was exposed by Dr. David. No more Rodney Wilk, Hallam Nich, and Mariano Brown skin fella. Well DEM doing the same thing with Maloney, TransTech Plaster of Paris and Sir Kiff. Time for a fresh new leader. One with the right knowledge, background and genuine leadership qualities. A WOMAN. She is perhaps THE MOST INTELLEGENT statesperson ANYWHERE IN THIS HERE CARIBBEAN. She can steer this ship. I’d like to see Dr. David as her deputy and Minister of Finance. We will be back on track for sure.

    • Leroy February 9, 2017 at 9:15 pm

      But she doesnt take advice from anyone Peter! How can she be a great leader then? She is also no economist.
      One person cannot lead Barbados out of this pickle we find ourselves in. We need collective agreement and planning.

  7. BaJan boy February 9, 2017 at 8:36 am

    When the opposition leader suggested an eminent persons group to help advise government and suggested that Owen Arthur would be her choice to help he jumped up and around refusing and even tried to cause he distress and embarresment in the proces. Now he want to look like the only savior of our economy out comes the same suggestion. This guy’s ego is just too big. Ok Owen go ahead and name your team of economist not eminent persons and bring the economy back to good health. We know Lazy Stuart and dumb Sinkler can’t get it done but had you cooperated and supported Mia four years ago it would have been better much better. Time Barbados calls an election and let the woman vision take control..

  8. BaJan boy February 9, 2017 at 8:42 am

    Peter you were on the right path until you talk od a Dr. David. That will not happen and the B’s don’t want any of them who gave all of the government contracts to the seven white men and then one a free ride for a lifetime.The least tanks is an indictment on this government espesially at a time when money is scarce. Peter you have to add a Da.Silva the same Guy’s good friend a Bierrcum, a Weatherhead a Butch and a team of Williams. None of those sound black to me. We have a visionary in that highly intelligent lady and thank God Barbados has embraced her and I am sure whe will NEVER let them down.

  9. hcalndre February 9, 2017 at 9:21 am

    I have heard that there`s light at the end of the tunnel, I have heard that the economy has turned the corner, I have heard that the tourist season is booming again so there is a need to build more hotels, in the US spring is about 12 weeks away and I heard it was not a very good season for barbados, I have heard an apologist labeling people as gloom and dome advocates, have not heard those words lately, have heard Mr. Arthur and other economists spoke with one voice and the only ones that either don`t want to tell it like it is or refuse to tell the people the truth is the PM or the MOF. What I am hearing is that the country is not well and urgent remedies are needed, are they going to wait until rigor mortis steps in then to know that nothing can be done but to have a funeral.

  10. Kevin February 9, 2017 at 9:25 am

    All remedies will point to job losses and cuts in social services. That the bitter pill that must be swallowed, either by this administration or the next.

  11. Ann Thomas February 9, 2017 at 12:34 pm

    Really Mr. Arthur, you must be kidding?

    Is this the person who ridiculed the Leader of the Opposition’s call for an Eminent Person’s group a few years ago? At that time, such a group would have been able to make a meaningful contribution and perhaps help to stave off that which he now speaks about.

    No, Mr. Arthur, you have no credibility on this matter. Who do you really think has the confidence in this government to work with them to solve the problem? And, do you really think that this arrogant Government would listen to anybody, anyway.

    The time for elections is now not later. Elections first, with a change of government and then on to solving the problems of the country.

  12. Gearbox1964 February 9, 2017 at 3:42 pm

    Exactly Ann Thomas…I can’t believe this is the same Owen Arthur who is now calling for cooperation on solving the country’s problems. Isn’t politics a “blood sport” anymore Owen??? LOL

  13. Hal Austin February 10, 2017 at 5:23 am

    Another Owen Arthur press release. Where is the balance?


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