Short-sighted Kamikaze budget

I have to admit that I did not even know what to write about this week.  I am still reeling from the proposed new taxes in the Budget and the things revealed by the Opposition Leader in her reply. These represent a new level of taxes never seen before in Barbados and disclose a new level of poor governance.

To make matters worse, I started to read the Auditor General’s report for 2016. What is apparent is that if the Government had not made Unauthorized Advances of $326,231,304 during the 2016 financial year or had $983,938,912 in other outstanding loans, they would not have to be squeezing us to get $400 million plus in taxes to “balance the budget” and bring in revenue.

I used to be an accountant so I know that the advances and loans are Balance Sheet items and the tax revenue goes to the Income Statement, but both affect cash flow which is needed to pay debts and to run the country.

According to the AG’s report, $213 million of the Unauthorized Advances represented debt obligations taken over by the Government of Barbados on behalf of the Barbados Agricultural Management Company Ltd. He also noted that: “There was no evidence provided that the remaining $113 million was made from any capital appropriation approved by Parliament as is required.”

Now let us not lose sight of something very important as we reel over the numbers. They were Unauthorized Advances.  In other words, the Government did not get authorization to advance them. Then, if we look at the staggering amount of $983,938,912 in outstanding loans, we can see that if any effort at all was made to collect these loans or even half, the budget could have instead be used to implement measures that would stimulate growth in the economy rather than choke what little life there is in it.

I previously talked about the amount due from the Barbados Tourism Inc. and that has not changed in a year so I will not mention it again. Then there is the loan of $28,000,000 to the Small Hotels Investment Fund in April 2007, which was to have started being repaid from December 31, 2010 but to date no payments had been made. There is also the Four Seasons fiasco.

To quote the AG’s report: “The Government of Barbados guaranteed a loan for $120,000,000 in respect of the Four Seasons Development project during the financial year 2011/2012. This guaranteed debt was called during the financial year 2013/2014 by the bankers. The guarantee and the outstanding interest which totalled $124,329,766 were paid by Government through its holding company, Clearwater Bay.”

Clearwater Bay Limited is the company that is wholly owned and controlled by the Government and was incorporated for use as a special purpose vehicle to facilitate the recommencement of the Four Seasons Development project. The one that never started, but that we’re hearing about again after having to pay the $120 million plus interest. Granted, the amount paid was brought into the accounts of the Treasury as a receivable but there has been no movement on the account in four years. Does that smell like a bad debt to you?

There are others, but another one of interest is this. To quote the AG’s report again: “During the financial year 2004/2005, an amount of $4,666,781 was advanced to Needham’s Point Holdings Limited (a Government owned company) to facilitate the construction of the Hilton Hotel. The agreement was signed by the parties on June 23, 2005. The loans carried an interest rate of 2.5 per cent on the reducing balance. As at March 31, 2016, a total of $6,023,283 inclusive of interest due, was owed by Needham’s Point Holdings to the Government. The Company has so far failed to make payment toward the loan principal. In this regard, no evidence was submitted for audit inspection to indicate that efforts have been made to recover the outstanding debt.”

In this Budget, the Government has said it is their intention to sell Needham’s Point Holdings Ltd. I wonder if the purchaser will be required to pay back the debt to the Government and if that is included in the purchase price.  I saw a quote on Facebook that made me laugh. The person said: “Does the government need a tax clearance certificate to sell the Hilton? I will have to remind them that they still owe me from 2014.”

Jokes aside, this is a very serious and desperate situation. I always make it clear that I am non-partisan but Wednesday night I sat down and watched the Opposition Leader’s response to the Budget and while she is not perfect (as she admitted), I saw a woman who was passionate about this country and, in particular, the poor. She talked about 4 000 people in Barbados still using a pit toilet (even if it is only 400,  that is unacceptable) while we have seen money wasted on projects like the Grotto and in cost overruns on so many other projects that could have been used to provide flushing toilets for these people. And that is just one example.

We need to realize that every time projects are awarded to a select few people, sometimes without a proper tender process (what Grenville Phillips called in his recent article Berries for the Boys) and every time a project has overruns, that is money that could have gone into the hospital, into the University of the West Indies or to fix the roads and repair the street lights.  We the taxpayers are suffering for every poor decision made and for every bad dollar spent.

So how do we make our Government accountable?  Whether it is this one or the next. We can start by insisting on the proclamation of the Prevention of Corruption Act.  That is only a deterrent though. We have to stop silently complaining and do something. We have to make our presence felt at the polls.

I feel the Minister of Finance just delivered a short-term, short-sighted Kamikaze budget. Surely we have reached a new level of lack of caring and compassion by a Government for the people of Barbados. We must therefore have a new level of voter turnout at the polls and speak with our votes.

Donna Every is an author, international speaker and trainer. She was the Barbados Ambassador for Women’s Entrepreneurship Day (2014 – 2016) and is the Barbados Facilitator for the InfoDev WINC Acceleration Programme. Email: donna@donnaevery.com; Website:  www.donnaevery.comwww.facebook.com/DonnaEvery1

19 Responses to Short-sighted Kamikaze budget

  1. Santini More
    Santini More June 3, 2017 at 12:30 pm

    Excellent article.

    Reply
  2. Lilian Lloyd
    Lilian Lloyd June 3, 2017 at 12:39 pm

    CHRIS STINKCLER TAXALOT

    Reply
  3. Seawolf June 3, 2017 at 12:47 pm

    A very good explanation of a disgraceful situation.

    Reply
  4. Albert Keizer
    Albert Keizer June 3, 2017 at 1:01 pm

    wow

    Reply
  5. Stephen Taylor
    Stephen Taylor June 3, 2017 at 1:13 pm

    Well written article.

    Reply
  6. Maureen Drake-Clarke
    Maureen Drake-Clarke June 3, 2017 at 1:56 pm

    Sarah A Didier

    Reply
  7. Maureen Drake-Clarke
    Maureen Drake-Clarke June 3, 2017 at 1:57 pm

    Marena Tanner

    Reply
  8. jrsmith June 3, 2017 at 2:46 pm

    How the hell this government is allowed to get away being so crooked and corrupt………………… I was planning to vote for the (BLP) but no they are jokers , they are scared of something they had sufficient time to wipe the floor with this crooked government…………………………………………………………..

    Reply
  9. jrsmith June 3, 2017 at 2:48 pm

    How the hell this government is allowed to get away being so crooked and corrupt………………… I was planning to vote for the (BLP) but no they are jokers , they are scared of something they had sufficient time to wipe the floor with this crooked government………………….

    Reply
  10. Marcia June 4, 2017 at 9:38 am

    A well written article , not a word salad so any idiot could understand. it. At times folk just call words at the end i wonder what on earth did I just read. Keep the good work up.

    Reply
  11. Gloria mendes June 4, 2017 at 2:46 pm

    Very well written and informative. After reading this and seeing our prime minister receiving his new Mercedes. I am now more disgusted than ever to see in this day and age we are been taxed beyond limit. While poor people’s children go to school hungry and politicians live in luxury.

    Reply
    • Viterose Van Huis June 6, 2017 at 5:59 pm

      unfortunately today to be in politics mean to enrich self, not to serve the country and people. It is sickening.

      Reply
  12. Rawle maycock June 5, 2017 at 5:00 am

    The $120,000 was taken from your NIS FUNDS,and never put back I keep asking that question even the $10 million that was loan to Clico I never heard if that got repaid.the agreement with the Central bank, NIS and government would still be the same loans but at a lower rate as that’s the only places tha goverment can get a a loan.

    Reply
  13. Laurens June 7, 2017 at 1:37 am

    DLP – rotten to the core
    Bajans need to throw them out of office – it won’t happen as Bajans take so much crap and they don’t have the courage to to take back their country. Gov ministers who made the country poorer should be in jail. Throw in some of the bankers too.

    Reply

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