No threat!

Pilgrim and Marshall defend Govt’s printing of money

A local economist today sought to quell fears surrounding Government’s continued printing of money, even though outgoing Central Bank Governor Dr DeLisle Worrell has warned that the practice by the Freundel Stuart administration as a means of meeting its domestic wage bill immediately needs to stop.

Delivering the first address in the Central Bank’s 2017 lecture series at Grande Salle this afternoon, Dr Don Marshall acknowledged that a money printing binge could hurt the domestic currency.

However, he assured that there was no need for panic at this stage, while suggesting that “most of the commentators who have been speaking about the deleterious impact that printing of money can have, actually overstated the argument about it putting pressure on the currency peg.

“It takes some doing for it to lead eventually to dollar devaluation,” Marshall, who is the director of the Sir Arthur Lewis Institute of Social and Economic Studies (SALISES), further assured.

However, he immediately made it clear that he was not ruling out the possibility of a currency devaluation.

“I am not saying that [printing of money] doesn’t lead to that; I am simply saying that when left unabated over a long period it will take some doing,” he contended.

His statement coincided with one issued by an unapologetic General Secretary of the ruling Democratic Labour Party (DLP) George Pilgrim who though admitting that printing new money was not the preferred way to go, said: “Barbadians are not fools. The issues vented in the public domain are no secret. The Government of Barbados prints money. Full stop.”

George Pilgrim & Dr Don Marshall

In further making a case for Government’s printing of money, Pilgrim told reporters at a press conference at party headquarters the policy was necessary in order to make up the shortfall in reduced revenues so public officers could be paid.

“Corporation taxes declined mainly from the offshore sector since 2009 by $200 million per year, transfers are up by only $50 million over the period we were in office [nine years]. Commercial banks are not buying Government paper, which helps create the shortfall, hence the Central Bank picks up the slack, hence printing of money,” he added. 

Pilgrim went on to argue that money was being printed to ensure this country’s “fabric” and its people were secured, while insisting that Government has bills to pay.

“Salaries and wages of public servants translate to families and homes surviving in this society and why should this party apologize for keeping public servants in jobs,” the general secretary added.

However, both Marshall and Pilgrim’s position contradicts Worrell’s strong warning to the Government earlier this month to stop printing money.

During a televised economic forum hosted by the Central Bank, the outgoing Governor, whose position on the matter is believed to have influenced Minister of Finance Chris Sinckler’s decision to remove him, said while the Barbados dollar was “a long way” away from devaluation, it was not out of danger.

And as it relates to the printing of money, Worrell had argued that in order not to “cause a disaster in the economy”, the Central Bank was forced to come up with $50 million every month to pay public workers because the tax collection agency, the Barbados Revenue Authority (BRA) was not earning enough to cover the monthly bills.

“On the week on which Government workers are paid, we always know that in addition to all the other expenses, we have to find $50 million approximately to pay Government wages. That is why the amount the Central Bank lends always goes up on that week because BRA does not bring in enough money to meet Government salaries during salary weeks,” Worrell had revealed.

“That is why the current account deficit has to be eliminated, not just reviewed. Government has to live within its means on an ongoing basis,” he added.

However, today Marshall seemly broke ranks with the Governor, in suggesting that the printing of money was not presently a problem even though he did agree with Worrell on the need for Government to rein in its spending.

“It is true that a profligate spender will always be looked at suspiciously by those who wish to make an investment in that spender’s economy. They want to know that the Government of the day is being fiscally responsible and will close its deficit as well as pay attention to its debt servicing,” Marshall said.

The latest report from the Central Bank shows the island’s foreign reserves had fallen below the benchmark 12 weeks of import, to less than $700 million at the end of December. As at January 2017, capital expenditure had also fallen by $36 million and the overall fiscal deficit, estimated at $665 million, was said to $5 million smaller.

However, Marshall took issue with suggestions by other economists that the island needed to enter a formal programme with the International Monetary Fund (IMF).

“I am against going to the IMF not for any ideological reasons other than that there is not one of them that have any modicum of understanding of what industrial policy is like for small island economies like Barbados.

“It is fundamental point and I stand behind it, they went to school and I went to school. Thanks to the Barrow/Grantley Adams vision, I am able to stand before you here and say that none of them in Washington have an understanding of what industrial policy would look like for an economy like ours,” Marshall insisted.

Marshall, who currently sits on a number of Government boards, also argued that despite Barbados’ high debt, the island was not in danger of defaulting on its foreign obligation but that “its debt is largely local, which is a different debt profile to the Caribbean countries that have gone to the IMF.

“Between the NIS [National Insurance Scheme] and the commercial banks, we owe substantial debt. So debt crisis is largely local and we have to service that debt by meeting the interest payments when they become due,” the economist said.

“So more and more the Barbadian dollar rather than going towards refurbishing plants and infrastructure like sewage plants and potholes, it is going towards debt servicing,” he acknowledged, adding that this was largely due to the insistence of the ruling Democratic Labour Party on the maintenance of the social framework, which pre-dated the 2009 collapse of the international business sector, which, apart from tourism, was country’s main economic driver.

27 Responses to No threat!

  1. Sherene Drakes-Seales
    Sherene Drakes-Seales February 24, 2017 at 1:49 am

    Don boy ya smartly begging fa dah governor pick.. Yuze a real Paling cock.. Uh tell ya!

  2. Hal Austin February 24, 2017 at 4:11 am

    This speech looks very much as if it is providing sthe intellectual anchor for the minister of finance in his fight with the governor of the central bank.
    But, like most things, it is half truth. The printing of money can be aa rather progressive policy development, but if the money is used for infrastructural works and to create jobs.
    However, if it is used to pay civil servants, as it is alleged, it is not only a waste of an opportunity, but perverse in its intent.
    What Dr Marshall and the other big battalions at Cave Hill are not saying – either because they want to hold their fire dry or because they have no ideas outside the consensus – is that as soon as the pain of the financial crisis began to affect the Barbados economy the government should have printed money to re-develop the City, the slums of Nelson Street and the surrounding area, Baxters Road, etc.
    These are projects that would have benefited future generations, help to create a night-time economy, create hundreds of new jobs and catapult Bridgetown in to be the entertainment capital of the Eastern capital.
    It would also feed consumer spending, allowing small businesses to improve their inventories and hire even more staff, thereby improving tax revenues.
    We know the principle of printing money is not disputed, it is what that money is used for.
    But because most politicians are not knowledgeable about their portfolios they have to depend n the men and women at the top of the civil service, who hold the nation to ransom.
    Once they are paid, and their retired friend and former colleagues get their pensions, they could not care less about the state of the economy.
    The other serious problem we have as a nation is reducing every issue to a party-political one, rather than taking a step back and doing what is best for the nation.


    • Haskell Murray February 24, 2017 at 9:42 am

      Hal , your article missed a critical point in that the government has to put in place a rigorous tax collection and prosecution policy . It is not good printing money to create construction jobs by revitalizing Nelson street etc thus generating tax revenues if it is not going to be collected. Your article missed the point that the central bank has to advance $ 50 million every month to pay the public servants, thus the minister of finance should be asked this question. What are you doing about the non collection of $100 million in taxes owed by lawyers, doctors,average citizens and corporations. If this money was being collected there would not be an issue with Dr Worrell.

  3. James Austin Bynoe
    James Austin Bynoe February 24, 2017 at 4:18 am

    new GCB maybe … since you like printing money so much

  4. Angus Benn
    Angus Benn February 24, 2017 at 5:14 am

    They should print enough to give everyone one couple million. We don’t have to worry any more. They will win back election easily.

  5. Kirk Fedee
    Kirk Fedee February 24, 2017 at 5:31 am

    Don Marshall was always a D

  6. Danny Colombian Clarke
    Danny Colombian Clarke February 24, 2017 at 5:54 am

    Well one things for sure . Who replaces Worrell got to be Sinclair couch puppy who follows every command faithfully and never barks cause some good money gotta print leading up to elections .

  7. sticks and stones February 24, 2017 at 6:37 am

    it is so easy to say reduce the public service but when such actions are taken productivity drops and it would be wishful thinking to expect public servants to take up additional work for the employee that was fired. Furthermore one can expect that the Unions would be hot on govt tail crying disadvantage practices being done by govt towards the public servants

  8. Mariam Makeba
    Mariam Makeba February 24, 2017 at 6:52 am

    From day one you did singing a different song, we dun know you got you eyes on a piece a de pie. You talking S and de future Governor ain’t opening he mout yet and dah ain’t like he.

  9. Tony Webster February 24, 2017 at 7:01 am

    While most Bajans are holding their collective breath, and praying that divine wisdom attend Those in Whom we have placed our Trust to govern us….there are yet those who procrastinate, prevaricate, dither and worse, refusing to see the elephant in the room. Would you believe that whilst we all waited with bated breath yesterday afternoon, for the High Court’s ruling, that on tuning into 100.7 FM, I was party to a senator of the government hue, regaling at length that worthy chamber, with how he used to walk thtrough Bridgetown, to pay his granny’s rent to the housing authority, and which shops he frequented along the way, what were his favourite snacks for lunch, etc and etc and etc, and ad nauseum.
    I refuse to name the Honourable, Relevant member…but will aver, he Jests overmuch; morover, that it be humanly impossible for him to receive his monthly stipend for such duties, responsibilities and total irrelevancies, without prick of conscience…and it passes my understanding why we have a Senate that accomodates such arrant nonsense, without censure from the Chair.

    Bring on the Republic. At least we shall have the grotesque pleasure of electing such fools as Senators…and also concurrent responsibility of avoiding such.

  10. jrsmith February 24, 2017 at 7:19 am

    Bajans all , 8 years of what ever you choose to call it , bajans put up with, but all at a sudden all the know all educators come crawling out of the wood work , saying what is wrong or right but none of these , since , (2008) until now got anything right, around the world………………………………………………………..

  11. Shanika Roberts Odle
    Shanika Roberts Odle February 24, 2017 at 7:20 am

    So Don why have government workers not been paid this week??????

  12. Winnie Meade
    Winnie Meade February 24, 2017 at 7:21 am

    I think they may give it to Dom marshall could they bring tony marshal it will be someone that will do as they want print money

  13. Carson C Cadogan February 24, 2017 at 7:45 am

    The printing of money would only affect Barbados’ economy if the economy was operating at full capacity which it is not. Thanks to an inept Barbados Private sector.

    • Peter February 24, 2017 at 8:53 am

      Carson C Cadogan there you go again. Dumb to the bone. Learn this… Many people see the private sector as a stubborn horse to be flogged. Many see it as a fattened cow to be milked. Few are those that see it as the strong ox pulling the entire cart and its weight.

      • Carson C Cadogan February 24, 2017 at 11:57 am

        Wrong again.

        The Barbados private sector is far from pulling the cart, they are not even pulling their weight.

        If you want to see a really robust private sector look no further than Jamaica and Trinidad, especially TRINIDAD.

        Which country’s private sector is it that is buying up so many dying Barbados Private sector enterprises?

        The Trinidad private sector is slowly becoming the savior of Bajan enterprises.

  14. Niel Harper February 24, 2017 at 8:33 am

    Hey smarties pants at Barbados Today! Dr. Don Marshall is a political scientist and not an economist. Hence, his advice should be taken with a pinch of salt (actually it should be disregarded altogether)

  15. RB February 24, 2017 at 8:37 am

    Your article states: “Marshall, who currently sits on a number of Government boards” … This says it all, a party man, not an independent commentator. Take it with a grain of salt.

  16. Ryan Bayne
    Ryan Bayne February 24, 2017 at 9:22 am

    Well, former Calypso king Classic’s song has come to fruition: both Pilgrim and Marshall along with Dems “In Bed Together”. LOL

  17. The Rock February 24, 2017 at 12:15 pm

    Corporation taxes declined mainly from the offshore sector since 2009 by $200 million per year, transfers are up by only $50 million over the period we were in office [nine years]. Commercial banks are not buying Government paper, which helps create the shortfall, hence the Central Bank picks up the slack, hence printing of money,”

    Whose fault is that?
    Fix it you fools.. stop complaining

  18. jrsmith February 24, 2017 at 12:43 pm

    Trinidad is politically more corrupt and unstable than barbados by far, but behaviour in the region is all the same, the private sector act the same way , the profits is on a one way street out of the region into foreign banks and tax havens, not even reinvesting in the region…………………
    Barbados is all set up for the taking but not by bajans , thats why Trinidad gets away with doing anything in barbados , because corporates use barbados as the guinea pig…. or stepping stone to the region……………………..

  19. Ann Thomas February 24, 2017 at 12:46 pm

    Oh what a tangled web we weave, when first we practice to deceive!

    Please tell us, Mr. Pilgrim and Dr. Marshall why this government finds itself having to print money to pay public servants. Failed economic policies, bad management, a dismal fiscal consolidation programme, shall I continue? And under whose watch?

    You know that salaries and wages translate to families? Really? Did they not translate to the families let go in early 2014? Did they not translate to the families of the persons unceremoniously let go from the BIDC? Did they not affect the lives of those awaiting the judgement of the Employment Rights Tribunal?

    Do not try to use that scare tactic. There are very few Barbadians that do not understand what has been done to this country by this DLP Administration. We understand only too well the diminishing of our standard of living, our hopes and dreams for our children and the decimation of our society. We understand all of that too well Mr. Pilgrim.

    Well, here’s a message to you and the rest of the DLP. Your apologists are not going to calm waters, the BLP is not scaring us, we are scared by a Government whose Prime Minister refuses to address the people of Barbados on matters that count. Silence is not golden in this case, it makes for suspicion, fear and all that goes with it. A cocktail sip is more important than Barbadians and Barbados!

    Too late shall be your cry.

  20. Greengiant February 24, 2017 at 1:40 pm

    The wages being paid from this money printing goes towards paying the public sector employees. So this money actually is being spent within the local economy on a monthly basis.

    Now what government need is a properly functioning tax collection system. Timely tax refunds so they too can benifit from this mass circulation. With local dept incured to generate local spending then we are not too badly off as this dept can be serviced without the need for foreign borrowing. Once they can get the projects moving to get foreign direct investment the playing field looks good for the new administration.

    The BLP like the DLP however will not move to reduce public expenditure. That’s why we need a real alternative to these two.

  21. Hal Austin February 24, 2017 at 1:56 pm

    Haskell Murray,

    You are right, but as the collection of taxes is matter of competence, and has been remarked upon often in terms of the auditor general’s reports, I did not think it necessary this time.
    I have said elsewhere that private companies that refuse to pay their NIS, income tax and VAT should be given a deadline then declared bankrupt.

  22. Don Marshall February 24, 2017 at 2:48 pm

    The report here was deliberately fashioned to make me sound like I was panel beating for Government. The authors have reasons for imagining any comment I made as partisan. They have struck on the fact that I chair and sit on just the one Board – the BAMC. this is part of my public duty as a citizen and an employee of UWI where such is part of our contract. I too served in the Arthur Administration much like every executive member of each Campus of UWI serve on Boards of both Governments when requested.

    Now both Worrell and I agreed that printing money exhaustively poses dangers to the currency peg. I said it however will take some doing and get said it will have to be excessive. Where is the difference in opinion?

    In the lecture I criticised government’s muddling through the period since 2010 and bemoaned theirs and the BLP’s lack of Developmental vision. I serve and I am not a member of any political party. In fact I have maintained throughout my professional life that our challenges transcend who occupies the state. One other thing. The surest way to devalue the solar is to cause panic. The ONLY signs of a devaluation are when you see commercial banks appealing to Central Bank for foreign currency; or people selling us dollars for more Bajan dollars than the official rate or when large sums of cash leave the country for several weeks on end. None of these have occurred.

    Don Marshall

  23. Mikey February 24, 2017 at 8:08 pm

    Something You guys are missing is the collection of taxes from the
    informal, underground economy.

    BRA has a responsibility to widen the tax net within a revamped tax system rather than squeeze every gill of blood out of dying tax payers.
    Oh, the professional/political class continue to reap the sweets by their clever tax avoidance practices (aided and abetted by the same laws they pass in both Houses of Assembly)
    Wow, 20,000.00 per month with extra perks (housing, entertainment, fully maintained vehicle/chaffeur and God knows what else )???
    He mussee duz go to bed whistling and wake up wid a big grin pun his face for the last 8 years !!!


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