‘Govt inching close to IMF or devaluation’

The Freundel Stuart administration could soon be left with one of two hard choices to make if its sources of private sector financing continue to dry up.

So warns economist Jeremy Stephen, who is suggesting that the only feasible options left are for Government to go cap in hand to the International Monetary Fund (IMF) or some other international funding agency, or face up to a devaluation of the Barbados dollar.

Stephen was reacting to confirmation given today by some of the island’s major investment firms, including Sagicor Asset Management Inc, Royal Fidelity Merchant Bank & Trust and Fortress Fund Managers, that there was now a decreased appetite for Government securities out of fear that the country could soon default on its debt.

Principal and Consulting Actuary with Eckler Ltd Lisa Wade also warned today that given the current situation in which the Stuart administration was struggling to bring its finances in line amid an overall debt of about 140 per cent and a high fiscal deficit of about six per cent of gross domestic product, “either bills won’t get paid, or taxes would have to be raised”.

And with Barbadians already complaining about for heavy taxation and with more than 60 per cent of Government’s financing currently coming from the private sector, Stephen said the writing was already on the wall in terms of the direction in which the country was headed economically.
“It is either the IMF or some other form of international funding, or devaluation,” he told Barbados TODAY, explaining that “if Government cannot finance its activities it would have to devalue, or rather the Central Bank would have to print more money, which would force devaluation.

“You don’t want that all of this drags down the reserves below eight weeks because that’s staring devaluation in its face,” he added.

Stephen also explained that for the last eight years Treasury bills had been the most dependable source of Government financing, with insurance firms and commercial banks buying the majority of these instruments.

“So if you look at past Central Bank reports, the commercial banks and the insurance companies were propping up Government for years,” he said.

Stephen, who only last week publicly revealed for the first time that he was one of the major architects behind Cabinet minister Dr David Estwick’s controversial US$5 billion, United Arab Emirates (UAE) alternative financing proposal which never got off the ground, also suggested that Government could try to persuade the Central Bank to increase the mandatory amount of Government paper, which commercial banks are required to hold.

However, the University of the West Indies economics lecturer warned that this option would have far reaching repercussions and could redound to further contraction of the Barbados economy.
“That option has so many repercussions at this time where confidence is short. The banks could pass on the increased risk in the form of fees as well as an increased spread on the interest rate between loans and saving.

“You can have a reduction in loans as the banks focus more on high value clients, which would very well slow down consumption in the economy even further. So Government might be able to finance its activities, but they won’t be generating tax revenue because nobody would be really buying nor would there be as much construction. So it is coming up closer and closer to where [Government] is going to need the emergency capital from the IMF or some other sovereign source,” he stressed.

colvillemounsey@barbadostoday.bb

33 Responses to ‘Govt inching close to IMF or devaluation’

  1. Yaaqov Abioye
    Yaaqov Abioye October 24, 2017 at 11:33 pm

    The Government got the last say don’t they Jeremy Stephens?

    Reply
  2. hcalndre October 25, 2017 at 12:21 am

    Mr. Jeremy Steven; the apologists for the DLP and those living in denial would only believe that the country is on its dying bed when the priest comes in to give the last rites. You hear them accuse the S & P and others to have a dislike for barbados and the economists don`t know anything and the One who accuses people of a doom and gloom mentality. The Stuart administration would lie to the people for another 6 months and if the barbadian people vote them in again then Mr. Stuart would go to the IMF then tell the people they don`t understand the english language.

    Reply
  3. archy perch October 25, 2017 at 4:40 am

    The prophets of governmental change; doom and gloom for the Barbados economy, have a well trained orchestra of naysayers playing Abide with Me.
    General Elections coming up and yah can’t keep Jeremy from making headlines in all media.
    I am yet to identify his agenda. What promises have been made by the BLP to these opportunists, should that great opposition party win the government. And I say great opposition party, because I think Barbados needs one to keep any government on their toes.
    This is exactly why the DLP Administration continues to hold things together,in these fierce and challenging world financial times.
    Step back from the mirror folks, and you will see that despite the rough turbulents, our health care has been quietly improving; and the many public services have not disappeared.
    Yes the roads are bad, mostly due to inclement weather but this al takes money, which is scarce right now. During Arthur’s time, I remember seeing horrible roads too, and there were no road markings, and road signs were lacking. The country was awashed with money then. If only we, the people of Barbados, would stop criticizing and belly-aching every day about how bad things are,and instead try to make things things better. No…we believe that a bunch of inexperienced ‘”unqualified”empty vessels, will turn Barbados into a land of milk and honey once they have the Treasury in their hands. Not true.
    The BLP had the Treasury before, remember?
    The expensive toilet at Oistins; The stupid houses Liz had with all the different names in the NHC yard, and she husband getting all the contracts; waisted money at Rock Hall; Eagle Hall et al; and Cricket World cup. Less we forget.
    And all of this happened with the great Economist called Owen Arthur who is is no longer at the helm.
    Is Mia an Economist? Is she a real Lawyer?
    So what makes you think that all of a sudden, Barbados will be the beacon of the world in a hard-pressed rugged turbulent world economy.
    SMH, Lord Help Us !

    Reply
    • Bajan October 25, 2017 at 8:24 am

      There has never been a time in the history of modern Barbados when families of patients at QEH were forced to buy gauze and other dressings, syringes and other medical necessities, for patients lying in hospital beds. The roads are worst than they have ever been, post-independence. The government buildings are falling apart and an eyesore to look at most times. The judicial system is a wreck. Safety and security for the citizens of the country are crumbling fast. Food prices are so high that the economic-vulnerable can’t afford to buy a basket of goods anymore. Those same vulnerable, including our youth, are turning to a life of crime and sexual favours, just to eat when the days come, not because they are bad and watless, but because they want to survive.

      And our young stars like Jermy Stephens and countless others have been pleading with the government of Barbados for years to heed the sound, practical and proven economic advice that they and many regional and international economists and related experts have given. They tirelessly gave the government strategic options on how to manage the economy of Barbados in a manner that would not have a disastrous impact on the people or interfere with the evolving of good governance. But the political arrogance of the government choose Party over people and ignored every single advice from any person that was not affiliated with their political party.

      Now we find ourselves in a position where some experts are now saying that despite being devasted by a hurricane recently, Dominica has a better economic perspective than Barbados.

      Reply
    • hcalndre October 25, 2017 at 8:31 pm

      @archy perch; you are right, any party that wants to take over the running of barbados from the DLP would have to be out of their minds. The debt and problems that they`re going to leave the country in, it will take more than 15 years to recover, no election should be until they return the country as they found it, something like what they have done with the sea eggs, no harvesting (election) until they are replenished. The DLP could only hold bajans like you together because bajans were taught to be docile and stay in their corners from the days of slavery.

      Reply
  4. Santini More
    Santini More October 25, 2017 at 6:22 am

    After 9 years of DLP economic mis-management this comes as no surprise. Freundel, Sinckler and the other band of incompetents have undermined this nation and made us the basket case of the Caribbean.

    Reply
  5. Don Keyote October 25, 2017 at 6:25 am

    “If only we, the people of Barbados, would stop criticizing and belly-aching every day about how bad things are,and instead try to make things things better.” BY DOING WHAT? burying our heads in the sand like you? volunteering to pay more taxes? stop eating? WHAT?

    The only thing the people of Barbados can do now (legally) is kick out the bunch of incompetents who have brought this once proud nation to its knees and hope to God that somebody else, anybody, can turn it around. The present lot are clearly incapable.

    Devaluation is not a solution. It is a PUNISHMENT FOR THE GROSS MISMANAGEMENT OF YOUR ECONOMY.

    Reply
  6. Alex Alleyne October 25, 2017 at 6:38 am

    CHRIS said “Not Under My Watch”. So, so, so so, Let’s pass it on to the NEXT LEADER/PARTY in Office.

    Reply
  7. Epaphras D. Williams
    Epaphras D. Williams October 25, 2017 at 6:51 am

    Christmas is coming the turkey getting fat, please put a tax cut in de old man hat.

    Reply
    • hcalndre October 25, 2017 at 9:24 pm

      Epaphras D. Williams; Thanksgiving and Christmas, turkeys will be handing out in barbados and beyond? I heard that Santa will be working until May so just leave your onion bag by your door and wait. You know that the sleigh was down for 9 1/2 years so for the next 4 or 5 months it will be rolling, naughty or nice, no problem, everybody going to get and they will all forget those 9 1/2 years.

      Reply
  8. Carson C Cadogan October 25, 2017 at 6:54 am

    Because the Cabinet of Barbados rejected your UAE financial offer, you are hoping for the worst for Barbados.

    A man who could not get a job in England.

    Reply
    • roger headley October 25, 2017 at 2:21 pm

      ooh, how small!

      Reply
    • hcalndre October 25, 2017 at 9:48 pm

      @Carson C Cadogan; Steven had no say in barbados` dimise. I heard the hypocrite say on radio that their god will put barbados back on its feet and give them another 5 years, with all the sad happenings around the world, barbados is going to be singled out after 16 people brought barbados to its knees so they are giving the 16 a free ride and hoping for a miracle.

      Reply
  9. just observing October 25, 2017 at 7:09 am

    Archy Perch, Will you kindly get down of your perch and stop singing for your supper .The dollar already devalued. We are taking home less and less items for our money. People like you sleeping on your consciences. Things are hard as hell here. Don’t be fooled by the big spenders who live at home , don’t contribute and still get food. Don’t be fooled by the ones who moving from rent house to rent house every three months leaving rent and utilities bills behind and feteing weekly. Look at us who have mortgages, land tax bills, insurances, bills , children to send to school and food to buy.
    I wish people like you would stop lumping all bajans in one basket. Right now most of us responsible homeowners and some renters smelling hell trying to make ends meet. Stop apologising for this government. You are making afool of yourself. Face facts !!!

    Reply
  10. Andrew Simpson October 25, 2017 at 7:40 am

    Cadillac mentality but bicycle reality. Michael Manley
    Back to the land. Sir James Mitchell
    All hands on deck. Errol Walton Barrow
    Emancipate yourself from mental slavery. Bob Marley
    Seek ye first the Kingdom of God. Jesus Christ

    Self-discipline is the alternative to devaluation.
    Discipling in Christianity will make us saved.

    Reply
  11. Richard Johnston October 25, 2017 at 7:41 am

    The banks have already devalued the Barbados currency. Why do you think you pay exorbitant rates for loans when the average US mortgage rate is 3.2%? It’s called the risk premium. They are anticipating being paid back in devalued Bds$.

    Reply
  12. Anton Brown
    Anton Brown October 25, 2017 at 7:45 am

    Why the devil he keep trying to push Barbados towards IMF? Look at the state of Jamaica now after them borrow money from the IMF between the China man and the
    Whites ,the Jamaicans not only owns no part
    of Jamaica ,but they are now worst off than
    before. Now if S&P already downgraded Barbados to a CCC+ rating, it’s an indication that any money borrowed the country will
    have a hard time paying it back. Where and
    how are they going to raise the money to pay back IMF when the main source of income for Barbados is strictly tourism? If tourism is
    not bringing in the money now to get us out
    of debt we are currently in, how the devil them think it’s going to raise enough capital to pay back IMF with interest?
    When they can’t payback IMF they will be
    the one holding power and deciding how government is run, what puppet them out in power of the people and them will control
    everything from government to business.
    Seems like Mr. Stuart really hell bent on selling or giving Barbados away. Why should he care, when he done he will be living like a
    king off all the money the stole from the
    country and have sitting in his personal bank account, while the ordinary Bajan will be suffering worst than they are today.
    Time for Stuart and his whole gang to just
    go. That’s the best thing for Barbados.

    Reply
    • Olutoye Walrond
      Olutoye Walrond October 25, 2017 at 8:51 am

      Can you really say Jamaica is worst off today than it was before the IMF intervention? I doubt it. And what does white and Chinese ownership in Jamaica have to do with the IMF?

      Reply
    • roger headley October 25, 2017 at 2:25 pm

      You really have no idea the state of the Jamaica economy. Trust me, that economy is much, much better than this one.

      Reply
      • hcalndre October 26, 2017 at 6:43 am

        Roger; the politicians and the apologists knowing that bajans don`t know what`s happening outside of theirs window would have them believe that barbados is doing better than all the other caribbean islands so that makes them feel good. Stuart would not go the IMF now but if he retains the government, crapaud smoke wunna pipe.

        Reply
  13. Tone Watts
    Tone Watts October 25, 2017 at 7:52 am

    I better start packing my bags

    Reply
  14. Thunder October 25, 2017 at 8:39 am

    We are too forgetful in this country it was the same government under the leadership of Sandiford that brought this country to it’s knees, so many public servants were sent home,people went overseas to live,to escape the horror that this country was put through.
    It was restored by the B.L.P party only to be put into the hands of the D.L.P for a second time,and one again look at what is happening, this is proof that this administration knows nothing about running this country,and if we hold on to them all they will do is take this country down.
    They have waste and mismanaged too much money,now everything is going haywire,this is not the time for mercy,this is time for us to send a strong message to this horrible government, by voting them out!

    Reply
  15. Anthony Michael Hinds
    Anthony Michael Hinds October 25, 2017 at 9:21 am

    3rd choice, early elections.

    Reply
  16. Maureen Annius
    Maureen Annius October 25, 2017 at 9:47 am

    Early elections would help lolol

    Reply
  17. Lee October 25, 2017 at 11:04 am

    Barbadians can help the situation by recognizing that 80 cents of every dollar we spend on imports is causing the drain in foreign exchange. A self-imposed restriction on extravagant travel and consumption will be much easier to cope with than the tsunami of hyperinflation that will gradually engulf us if we don’t recognize that we are living way beyond our productivities !! The taxes impositions and cut backs have a dual purpose of (1) meeting public expenditure and (2) SOAKING UP THE EXCESS DOLLARS IN CIRCULATION THAT ARE GOING INTO IMPORTS !!

    Reply
    • hcalndre October 26, 2017 at 6:55 am

      Lee, don`t you know that when the politicians leaving the country with an entourage and family, saying its a business trip and when they get, you never hear what was the outcome, you should tell them that, their families go to Miami and NY shopping why don`t you question that.

      Reply
  18. Greengiant October 25, 2017 at 11:31 am

    The government have to do what they have to. I’m sure it won’t be devaluation, and if the foreign investments from projects are allowed to come in instead of all these court injunctions they won’t need to go to the I M F either.

    Reply
    • Meakai October 25, 2017 at 12:03 pm

      Shh…the director has removed that scene from the script.
      Read between the lines for the new plot.

      Reply
  19. Helicopter(8P) October 25, 2017 at 1:45 pm

    Maybe dem wan’ Mr Sinoman to come! Give accupunture in head! Install some back freight and have dem loading boat wid all merchendise dat say “Made in Barbados”! Wong Ping You Agee!!

    Reply
  20. Sylvan Greenidge October 25, 2017 at 8:27 pm

    Only talking what he would like happen. He thinks that by constantly saying it that it would happen. How silly.

    Reply
  21. Milli Watt October 25, 2017 at 9:13 pm

    ahhhhhhhhhhh at last a devaluation ……..waiting to bring out this currency I got under de bed. If I could get a 4-1 to start you know how much I could get done. HURRY UP AND GET IT DONE!

    Reply
  22. Mark Adamson October 25, 2017 at 10:27 pm

    Where to start here.

    Ok. Let me see.
    .
    1) There is no such logic or human behaviour that can be properly be described as a devaluation of the Barbados Dollar. The faster many Barbadian people realize it the better for them. They need to expectorate that foolishness. The Barbados Dollar is a mere metaphor for the total unknown amount of dollars and cents commercially financially circulating at a given time in the country. What can possibly be though is a change in the RATIOS that exist between the Barbados Dollar and the US and other countries currencies.

    2) The government does not have to go to the IMF unless (1) there are certain international political conspiratorial actions in place that forces it to do so, or (2), it chooses to do so. Though No (1) has started to be the case, it does not have to end up that way, once it implements the right political economic and financial policies and programs. The government has to lead the way in motivating other countries in how to avoid going to the IMF!! We are not sure though that DLP and BLP governments will succeed in not going to the IMF especially with such international political conspiratorial actions. Still, only those who would like to see Barbados continues to slide down the slippery slope would want this for our country: Standard and Poor’s, Moody’s, and many
    within the BLP amongst others. Barbados is the only country out
    of the so-called More Developed Countries in the CARICOM region
    that has avoided the stranglehold of the IMF (not meaning though
    it has not gone to the IMF, when it has already done so).

    Reply
  23. hcalndre October 26, 2017 at 10:22 am

    Mark Adamson, you know if it recommended that you should have one of your feet amputated because of bad circulation and you try all local remedies until one day the foot gets gangrene and you still have to cut it off and there`s a old saying that goes, “if you play fast you wont last and if you play slow you still got to go.”

    Reply

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