#BTEditorial – How did we get back here?

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If ever we could not see that Barbados remains mired in deep economic agony, the blinkers must have fallen off yesterday.

The cold, stark reality was laid out by Director of Finance and Planning Ian Carrington in his characteristically blunt manner as the Government rolled out its debt restructuring programme.

“Let us be clear, Barbados is insolvent. This is the nature of a bankruptcy proceedings and what we are seeking to do is put our fiscal and our monetary house in order.”

But equally dire alarms were issued long before Carrington.

Rewind to the 2017/2018 Estimates of Revenue and Expenditure, when former Prime Minister Owen Arthur warned then that Barbados could not tackle its $3.3 billion debt crisis on its own.

Said Arthur: “A debt refinancing obligation of that order or magnitude cannot be accomplished without the help of the international financial community.

“And Sir, there is a powerful reason for us to engage with the International Monetary Fund. We are not going to get over the debt unless there is some institutional arrangement that gives credibility to the creditors of Barbados that the Government of Barbados is not acting unilaterally on the matter,” he said last year.

His repeated plea came to naught as the Freundel Stuart administration dithered, failing to take tough decisions, seemingly drunk on its own rhetorical Kool-Aid that the situation was under control even though the country’s economic indicators were abysmal.

The baffling inaction was vexing then and is now, especially when Stuart and his team had the lessons left by the earlier DLP administration of Erskine Sandiford (now Sir Lloyd), which faced with a fiscal dilemma in 1991.

That is perhaps why the views expressed by Minister of Finance Chris Sinckler in February 2017 about a possible approach to the IMF were especially peculiar.

Sinckler said: “We do not at this time believe it is necessary for Barbados to enter into an International Monetary Fund programme, whether stand-by or structural adjustment or whatever terminology.”

A year later, his tune had changed. Almost. “The IMF option is always on the table, it is just one of the options Government always has. That is why we joined…. If that is what the people of Barbados want, and they say that is what ought to be done, then we shall see.”

But we never turned to Washington. Now we are on an unprecedented fiscal cliff from which there is no easy escape and those who brought us to the brink are not the ones who are suffering now.

In the words of former Prime Minister Sir Lloyd Erskine Sandiford, “how did we get back here?”

And Barbadians are left to increasingly ask themselves, and each other, when will this all end?

Not for a long while and not without pain.

Government’s announced debt restructuring exercise, which has been touted as the credible way back to the path of stability, calls for major sacrifices by all.

Under the proposed arrangement, domestic creditors holding Government debt will retain the principal on their investments but they will now have to wait longer and receive a haircut on interest payments.

Already on radio and social media today, ordinary citizens were voicing concerns about the substantial losses they will face on their hard-earned investments in the full faith and credit of the Government of Barbados.

The bald facts are that there are no easy answers and no magic bullet. Government now stands between citizens and economic oblivion and is obligated to act wisely, fairly but decisively.

As the Prime Minister well knows, these are difficult times from which great leaders are sometimes forged. She therefore must ensure her Government remain frugal, talk straight to Barbadians as she has begun and where necessary, take hard decisions, even if that means putting the brakes or reversing election campaign promises that prove too costly.

This Government needs to plan its short-term fiscal objectives within the context of a broader strategy for long-term financial sustainability, and by all means it must protect the most vulnerable, eliminate inefficiencies and cut unnecessary expenses.

So we are in for a rough ride, but by redoubling our efforts to get Barbados right, we can weather the storm and make it to the other side.

The post #BTEditorial – How did we get back here? appeared first on Barbados Today.

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