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Barbados government debt alarming

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Throughout the elections campaign, and even earlier, Barbados Labour Party Leader, Mia Mottely, had been talking of financial mismanagement in public office, but what she saw since becoming prime minister has shocked the island’s new leader.

“It is a woeful state of affairs, and anybody who presided over this really needs to answer to the country for what in my view is a dereliction of duty that is unparalleled since independen­ce,” Mottley reported at her first post-Cabinet press briefing, Thursday, exactly one week after becoming the island’s eight elected leader.

“This country is in need of serious, urgent action with respect to its economy and its government,” she said, adding, “our foreign reserves are at a tenuous stage … We have a state of affairs where our deficit is unacceptably high. Indeed our debt represents the third highest in the world after Japan and Greece”.

The major discovery since assuming office is that the national debs as of Sept. 30, 2017 stood at $1.7 billion (Bds $1 = 50 cents US), a figure never before disclosed to the nation under the previous government.

But in recognition that the debt figure of eight months ago, she demanded an update, which is to be produced next week.

“Even the figures that I’ve been supplied in the last week as of the 30th of September are insufficient for us to make appropriate decisions,” she explained to members of the media.

But while the new Barbados prime minister awaits word on the current debt standing, which she recognises will be much more, her broke government has to scramble find money to meet international repayment obligations almost immediately.

“Our date with destiny starts from Tuesday with foreign debt payment between June 5th and 18th, which represents a high point of foreign debt payment for us over the course of the month of June to the tune of $100 million,” she said.

Within that estimated $100 million repayment to be made this month is money due for a US$225 Credit Suisse loan that that government took out in 2013 at higher than normal payback rates because other international lenders had no confidence in Barbados’ credit rating.

Mottley’s continuing discovery of the financial mire in which the government she inherited languishes includes revelations about local debt owed by the state and funds due to related agencies.

“Outstanding wire transfers as per the accountant general’s records were $621. 4 million. University of the West Indies, as per the last audit confirmation, was owed $229. 7 million and state-owned enterprises $467.7 million, bringing to a total of $1.315 billion,” were among the unsettled monies due eight months ago that she spoke about.

“And when we add to that approximately $345 million owed by the Barbados Revenue Authority [to taxpayers] you see that we are on or about approximately $1.7 billion,” she said.

Of the statutory corporations, all of whose debt government ultimately holds responsibility, Mottley reported that the Barbados Water Authority owed $70 million as of September 2017, and that figure is estimated to increase by $15 million when the books are updated.

The state-owned and lone broadcast television station, Caribbean Broadcasting Corporation, owes $125 million.

“I need not tell you therefore what I am likely to find at the Transport Board, the Queen Elizabeth Hospital, the National Housing Corporation, the National Conservation Commission,” Mottley said pointing to some of the other statutory corporations that have been operating at a loss for years.

On the other hand, government owes $459 million to the state company that stands out as a profitable enterprise, the National Insurance Scheme, the workers’ injury and pensions payment corporation.

“It represents a failure to pay rent since 2016 for all of the [NIS owned] buildings of which the government of Barbados either occupies or has an obligation to pay for, … it represents a failure to account for the reimbursement of non-contributory pensions for that period of time as well. This situation cannot be allowed to continue,” Mottley said.

The prime minister’s media briefing revealed only preliminary findings, but much more startling discoveries are expected as this island begins the long hard journey towards recovery.

Updated 3:05 am, July 10, 2018
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