Sorry doc!

Arthur says no to estwick’s uae formula

He has not yet been issued with any official instruments of appointment, but former Prime Minister Owen Arthur is already freely dishing out economic advice to the Freundel Stuart Government as if he were already its Chief Economic Advisor.

To start with, the respected economist and former Minister of Finance sees the need for urgent debt restructuring, given that 60 cents in every dollar that Government currently spends goes towards debt servicing.

However, Arthur is seriously recommending that the island takes a totally different route to the one presently being touted by Minister of Agriculture Dr David Estwick.

Former Prime Minister Owen Arthur and Dr David Estwick.

During a full and frank interview with Barbados TODAY this week in which he confirmed that he had been approached by Minister of Finance Chris Sinckler to lead his economic advisory team, the former prime minister warned that a debt solution was needed posthaste.

However, he said his preference was for a debt exchange arrangement, similar to the one recently implemented in Jamaica under the watchful eyes of the International Monetary Fund (IMF), as opposed to having Barbados go down the road of a US$5 billion sinking fund from the United Arab Emirates (UAE), as prescribed by Estwick as a way for the island to wipe out its entire debt and restore economic growth and sustainability.

“His approach would be different to mine. I would go the way of a debt exchange, which works well – as happened in Jamaica  – where a lot of your debt is local debt, that you can get the local debt holders to surrender their existing debt instruments and bond instruments and replace them with a different maturity.

“So you spread out the repayment over a longer period on the understanding that you get an ease on the interest in the short term, so that you don’t have a foreign exchange servicing problem down the road. That would be my solution,” Arthur told Barbados TODAY.

He stressed that Estwick’s proposal would be a whole different matter entirely, since “it would take all of the debt – domestic and foreign – and make it foreign”.

Nonetheless, Arthur was careful not to rub salt in the wounds of Estwick, who has been publicly fuming over the past two years over the fact that his so called ‘alternative economic strategy’ has not taken flight.

In his latest episode just over a week ago, Estwick went as far as saying that Government’s homegrown fiscal consolidation programme had failed, while again hoisting his UAE proposal as a possible saving grace.

However, Arthur stopped just short of saying that Estwick’s plan was total rubbish, as the Opposition Barbados Labour Party’s Economic Advisor Clyde Mascoll suggested last weekend when he warned that “what [Estwick] proposed as a debt strategy would not work.

“You cannot convert all of your debt, which is local, to foreign. We only have four loans that are foreign, so why would you convert all of your local debt to foreign debt and then have to look for foreign exchange to service that debt?” asked Mascoll, who holds a doctorate in economics, and specializes in public finance.

While staying away from any personal attacks, Arthur has also raised a number of questions about the proposed UAE arrangement which, he suggested, would not only turn the Government’s whole financing system on its head, but could also affect the financial viability of entities, such as the National Insurance Scheme (NIS), which currently hold Government debt instruments.

“Presuming that you got the money from UAE, you would have now to pay [the NIS] off, so they would have cash balances that they can’t hold as cash balances, because they have to invest it somewhere. If the Government was to get a loan, pay out them, they would have a cash balance, and what are they going to do with it? Are they going to invest it at home or abroad? Those are some of the imponderables of Mr Estwick’s proposal,” Arthur said, while insisting that a debt exchange would be the better way to proceed.

“It would be the easiest thing to do and the professor who I think will be a member of the [Sinckler’s economic] advisory group would be happy to enable us to have a debt exchange with the NIS,” said Arthur, in disclosing that NIS chairman Dr Justin Robinson was also due to be named to the National Economic Council.

“I am sure that he could be easily persuaded to let us take the bonds that you have, surrender them and give them a different maturity,” he stressed.

Since 2008, the island has been grappling with a serious economic situation, brought on by the global recession that began that year, but has morphed into both fiscal and balance of payments problems that have been met with Government’s implementation of a homegrown fiscal consolidation programme.

Arthur said one of the critical failures of that programme to date has been its inability to raise the desired foreign capital needed to resolve the country’s balance of payments and growth challenges.

However, the former prime minister was confident that there was still a large enough project interest in Barbados that could turn around the economy, even though he was still not satisfied that enough had been done by the Stuart administration by way of business facilitation, which he said was critical to safeguarding future economic growth.

14 Responses to Sorry doc!

  1. Mark Adamson March 3, 2017 at 12:55 am

    There must be the long term ABOLITION of ALL public debt over a period of time.

    This must involve, et al:

    1) The Abolition of Interest Rates.

    2) Massive reductions in the cost of use of money (local) in Barbados, via the establishment of the National Institutional Productive Money Transfer Scheme and the National Institutional Non-Productive Money Transfer Scheme.

    3) Where there is borrowing from the core financial system by persons, businesses and any other entities, to top up what comes out of the Schemes, the principle shall be where 100% of money was given by a core financial institution to a person or persons, 100% is still to be given by them to it; where 10 % and more have been transferred by them to it, 85 % of the amount and less would remain; where 25 % and more have been transferred, 65 % of the amount and less; where 35 % and more have been transferred, 55% of the amount and less; where 45% and more have been transferred, 45% and less; where 55% and more have been transferred, 35 % and less; if 65% and more have been transferred, 25 % and less; and where 85% have been transferred, 0 % is left.

    4) Outlawing the practice of the government’s issuing government paper.

    There must be a political revolution in the financial affairs of Barbados.

  2. Tony Webster March 3, 2017 at 2:02 am

    @ M. A. Why not go for brokes: abolish inflation; God will fix prices of evahthing; and while you’re at it, abolish money, greed, incentive to work, discounts for good customers, bring back barter, t’iefing ( sorry, borrowing wideout paying, will take Centre-stage)?
    All that would be left undone, would be to pave the streets wid gold….because we would all have “arrived”. I suggest you await the prescription(s) of the Eminent Ones, then pick up pen afresh.

    Another alternative, would be to reincarnate the Barbados Marketing Corporation, whose supermarkets were a smashing success . Smashed the consolidated fund, for sure.

    Old African Proverb: “Weeds are easily pulled, when yet young”
    Updated version, courtesy Mr. George Orwell: “Let the Animals Farm: DEM know how to farm, so let DEM get their share of the fatted pig, nuh?”

  3. sticks and stones March 3, 2017 at 5:55 am

    now that the chickens have come home to roost many are saying the safest route back is to call on those financial institution who were charitable in their given but one must recognized that these institution would not be charitable in their collection of the debt owed .

  4. Alex Alleyne March 3, 2017 at 6:46 am

    In your “privatization pill”. make sure it do not include the TRANSPORT BOARD.

  5. Bill March 3, 2017 at 8:29 am

    Do not privatize transport, health, education, sanitation. Most others can go including CBC and the ports of entry. Government will retain regulatory control

    • Gearbox1964 March 3, 2017 at 2:33 pm

      With regards to health and education, I think that those who can afford to pay out of pocket should be made to pay, and those who cannot pay should continue to have access to these services via the taxpayers.

  6. Peter March 3, 2017 at 10:23 am

    Tony Web, don’t waste your time on Mark Adams. He exhibits a classic example of ignorance and stupidity in ALL his comments. Barbados Today could have done a lot better than presenting a loooong drawn out story. I am sure that certain owners and directors are instructing the so called journalist what to write. They are all Owen’s point men. Point here is follow our instructions or end up like the now former governor of the Central Bank.

  7. Peter March 3, 2017 at 10:42 am

    Owen is clearly forcing himself back into the fray of politics. Sinkler is boldly slapping Stuart, Estwick and the rest of the DEMs in the face. How can he decide single handedly it seems, a known adversary of the DEMs in the face of all his colleagues. He has recommended to seek advise from? He is indirectly stating that NOT ONE of DEM is capable of coming to the aid of the party. They are not intellectually capable to. That clearly shows that Fruendel is NOT the real Prime Minister He passes the buck. He receives instructions from the knights in command as a good friend refers to them as. Lynette is an ornament. She will be knocked over, fall to the ground and shatter like Humpty Dumpty. She knows that. Chris KNOWS Dr. Estwick IS the right man to work with but he’s afraid of him. Mark my words there will be a lot of floor crossings.

    • Gearbox1964 March 3, 2017 at 2:26 pm

      Peter, Chris is also admitting his own incompetence as Finance Minister by inviting Owen to be his chief economic advisor. But didn’t we all know after the first 5 years that this DLP bunch is woefully inadequate to the task of running Barbados? Chupse!

  8. jus me March 3, 2017 at 11:08 am

    What AFFER says is sense.
    local money is just coloured paper.
    They, the Government can just print it, they do anyway.
    Great scheme pay back alla we, with pretty coloured paper and we happy cos we got reams of coloured paper, we been trained to recognise as having value, as so far , when we give our coloured paper, at where ever, they let us carry away their goods.
    Good thinking Mr Affer.

    We all know the NIS does as its told, so if the coloured paper works for them, who are we to argue.
    Who listens to us anyway.
    Certainly not this Government.

    Plus it doesent upset the current status quo, whereby nobody questions IF THE COLOURED PAPER DOES INDEED HAVE ANY VALUE.

    The books balance and we all happy in Cloud Cuckoo Land.

    The other is hard currency, coloured paper none the less, but backed by nations of substance recognised and respected.

    Plus AFFER says we owe not so much of that, whats a billion here or there??
    Its actually 1,000,000,000 dollars, put another way if you earn 90 dollars a day it would pay you for30,441.40 years, but who cares its only coloured paper

    We playing the Balance the Books game.
    Not real life.

    We juggle around the Loot until alla we happy and absolutely CLUELESS as to what has happened and we STILL owe the money anyway, except under different terms and these terms accepted by idiots we allow to LOOK AFTER?? our coloured paper and promote the idea it has value.

    The crucial question is HOW MUCH Hard Currency we got to raise and CAN WE.
    Cos if we owe 5 billions and 3 Billions is local that still leaves a default of 2,000,000,000 in hard currency.

    We also have to pay back at the rate of 60% of our earned $ now ,that’s is $1,200,000,000 over a year, if we take what we owe in hard currency as 2 billion, that means $ 5,479,452 PERDAY, pay back maybe over 20 years bringing the daily amount to 164,383$ that is 1,150,684 a week.
    NOT THE ACTUAL AMOUNT OWING that incurs these massive interest payments.
    You Really believe the CLOWNS who got us here as we are now,CAN ACTUALLY, FIND these sums continually, and NOT THEIVE and WASTE even more and still keep HMS BARBADOS afloat??.

    WEll ,All Hail the eternal optimist.

    Now what happens WHEN we do DEFAULT on the REAL MONEY, the HARD CURRENCY and there IS A DEVALUATION?
    What happens to all that LOCAL pretty coloured paper we have with NIS and the like.
    Well ONE IDEA is we roll it up and hang it on the bathroom wall by the JOHN..

  9. jus me March 3, 2017 at 11:38 am

    Why would Dr David, promote a US5,000,000,000 UAE fund??

    Well if I approach a bank or finance institution and put forward myself as arranging the loan, I would be paid a facilitation fee lets say HALF of ONE percent Put as a figure 0.05%.
    Very little ,Peanuts!!

    Now look again at the 5,000,000,000 proposed loan x 0.05% it is equal to 2,500,000 or 5,000,000 Bajun.
    To find whats FUNNY LOOK for the MONEY!!
    NOW THINK maybe 2% or 4%
    Even FUNNIER!!

  10. jus me March 3, 2017 at 12:04 pm

    Which reminds me .
    It was reported that a 500,000,000US$ loan was arranged for the New State of the Art sugar factory and the loan was arranged and paid thro a company run by none other than?? Politicos of course.

    What fee was extracted, before or even IF the money hit the treasury!!
    Barbados is just FULLA FUN isn’t it

  11. Gearbox1964 March 3, 2017 at 4:04 pm

    Getting good help at the 11th hour might actually get DEM re-elected. Poor Bajans doan know nuh betta. LOL

  12. robi March 4, 2017 at 9:21 am

    These are the things that Barbados will need to tackle in order to not fall back in this cycle of boom and bust:

    1. Food import bill (too much funds are lost due to imports)

    2. Health sector burden based on bad consumption habits (most diseases are due to food consumption patterns)

    3. A one-focused economy based on tourism (the economy needs to diversify. Other sectors of the economy must come up to provide raw materials for the tourism sector, such as agriculture)

    4. Training in the skills and tech sectors


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