Sugar boost

Govt seeking to refinance industry loan

The Senate today debated a resolution to borrow a further US$13.9 million (BDS$27.8 million) to assist in the refinancing of a $73 million sugar debt.

Leading off debate on the measure in the Upper Chamber today, Minister in the Office of the Prime Minister Senator Darcy Boyce explained that the loan, which was made to Government a few years ago for the purpose of providing resources to the Barbados Cane Industry Corporation matured earlier this year and had been repaid.

However, he said additional funds were now needed to take forward the restructuring of the sector.

Boyce explained that of $73 million that was originally borrowed, close to US$13.9 million was arranged by a bond by Ansa Merchant Bank and Consolidated Finance.

“It is that US dollar portion of the bonds that we are here to discuss a resolution on,” he said.

The monies were previously treated as domestic borrowing under the Special Loans Act. However, the Government Senator explained that based on the advice coming from the Office of the Chief Parliamentary Counsel and the Solicitor General’s Office it should really be characterised as foreign borrowing under the External Loans Act.

The latest loan is due to mature in six years with interest payable half yearly at a rate of 7.95 per cent annum. Boyce also explained that the principle is to be repaid in 12 equal semi-annual installments, starting six months after the disbursements.

“The bond is being issued at a price . . . a little bit below par . . . which makes the effective interest rate slightly above 7.95 per cent. The rate that we are getting on this borrowing is a little less than what we were earlier on and therefore we are happy to be able to accept this and take care of the loan,” he added.

Boyce contended that the fact that the two financial institutions agreed to arrange these loans, showed the confidence they continue to place in Barbados and that all was not dark and lost.

While acknowledging that the original loan was to support the sugar cane industry here with the focus mainly on the export of raw bulk sugar to the United Kingdom, the Government Senator pointed out that the thinking had since shifted to the production of special premium-priced sugars and quality molasses.

He explained that molasses was a critical ingredient in the manufacture of rum.

However, he said with the declining production of sugar over the years, the country had been forced to import the liquid commodity and ran the risk of breaching the European Union’s Rules of Origin by importing a crucial component for its locally branded rum.

Hence, he said the construction of the multi-purpose factory to produce a greater quantity of molasses, along with electricity from biomass and special sugars, was vital.

“And so, the view in Barbados is that we need to make sure we can revive the sugar cane industry in order that we can get the molasses that we need for that rum industry which earns foreign exchange,” he said.

11 Responses to Sugar boost

  1. Richard Johnston March 1, 2018 at 4:11 am

    Repaying this will cost more when the Barbados dollar is devalued.

  2. Tony Webster March 1, 2018 at 6:08 am

    Now I understand what “Scraping the bottom of de barrel” means. We’re now “refinancing” ( at higher interest-rates) even chump-change maturing loans, for the simple reason that we cannot bear even light touches , well-known to be falling due. Next…a C.D.B. “Cultural Industries Development Plan”…which somehow will end up paying B.L. & P. for street lights for last month.
    Or, we cud borrow from our Credit Unions, who , like ANSA and our new Chinese friends, would gladly hand over the moolah, because they are “patriotic”…and “friends”.

    Pick a card…any card.

  3. Sue Donym March 1, 2018 at 7:03 am

    This article is very confusing.
    It claims that government is looking to refinance the loan, yet it is stated that the the loan matured earlier this year and had been repaid.
    I’m guessing that the major portion has been paid and that it’s the Ansa/Consolidated portion – the bond that remains unpaid. However, the article at one place says that it is that bond issue being resolved, but at another place says that the monies are to carry forward the industry plans.

    It is even more a mystery if the monies were borrowed to establish the facility at Andrews, which has been on hold since court action was commenced against it. It appears that the monies were directed elsewhere if they are unavailable to pay off the bond.

    Another query concerns the issue of molasses raised. As far as I know government is not in the business of making rum. So, will gov’t be making molasses for a rum production company or will we be financing a molasses production facility for a private concern who will be producing rum? What is the arrangement; who benefits and to what extent?

    • David Brathwaite March 1, 2018 at 7:48 am

      I like your insightful analysis.

      Many times the stories on Barbados Today are a rambling set of nonsense because the reporters do not take the time to do the analysis.

      I have had occasion to call out the Nation as well on their sloppy reporting.

      • Sue Donym March 1, 2018 at 7:55 am

        Thank you @David Brathwaite. Too many times it is evident that reporters are simply recording and writing what they think they hear on playback. The editors are possibly letting clarity and accuracy slip for the sake of volume, or getting the story first.

  4. Sheron Inniss March 1, 2018 at 7:08 am

    Our dollar is staying pegged to the $US for now. Pegging was man-made, that can change.
    Lord have mercy and let the people put out the DEMs.

  5. john March 1, 2018 at 11:25 am

    Tony you are quite correct. When you can’t find the few dollars to pay a small loan, so you kick the payment down the road even though you risk paying a higher rate of interest things bad!


  6. milli.watt March 1, 2018 at 11:26 am

    yuh lie……….wuh industry. all yuh all need to stop put down the pens and take a RUNNING STEP BACK

  7. Freeagent March 1, 2018 at 12:19 pm

    When will we and our children be able to repay all of these loans?

  8. Ralph W Talma March 1, 2018 at 1:05 pm

    1. Once again Barbados Today has deemed it fit to not publish my note on the above subject. It is wrong to ask for comments BT and then not print them, even though there is neither libel nor other illegality involved.
    2. In brief, I said I was content with the desire to increase both rum and molasses production, especially now UK will be on the market post Brexit. I have a tot of B’dos rum every evening before dinner/supper; indeed my boy Edwy called this morning to say he had just refilled my decanter from a certain place (SN). So, roll on next week.
    3. What I do not understand is why the Government is paying
    7.95% on the loan, when rates of nearly a half that can be obtained on the open market?

  9. jrsmith March 1, 2018 at 3:47 pm

    Why don’t the government start recovering some of the 900 millions which is missing if that is true …………………


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