BRIDGETOWN, Barbados, Wednesday March 18, 2015, CMC – Former prime minister Owen Arthur Tuesday called on the Barbados government to re-examine its policies relating to the inland’s burgeoning debt saying any future economic growth would be dwarfed by increased financial problems.
Arthur said Barbados’ annual debt service of BDS$240 million (One BDS dollar =US$0.50 cents) is growing at a faster rate than the deficit.
Arthur, an economist, who also served as finance minister here, told legislators during the debate on the 2015-16 estimates of revenue and expenditure, that the debt situation would negatively impact any benefits to be derived from the 0.3 per cent economic growth indicated by the Finance Minister Chris Sinckler on Monday.
“The important index in this is not the debt to GDP (gross domestic product) ratio. There are countries like Japan, Italy that have a debt to GDP ratio that is twice Barbados,” he said.
“The key issue is the debt to revenue. Barbados has now reached the stage where out of every dollar of revenue that the government of Barbados earns, 66 per cent has to go to pay for the debt.”
He warned that once this scenario continues “all of the problems we hear about, the absence of toilet paper at the hospital and these things, they will persist”.
At the start of the debate on Monday, Sinckler told legislators that the home grown fiscal adjustment and stabilisation programme had started to bear fruit and that the economy should grow between one and two per cent this year.
“At the end of this current financial year the primary balance will improve from negative 385 million dollars (One BDSs dollar =US$0.50 cents) to a surplus of 56 million dollars,” Sinckler said as he led off the week long debate on the fiscal package.
He told legislators it would mean that for the first time since 2011, Barbados is running a primary surplus “and we are on our way to restoring the fiscal well being of the country.
But Arthur said that he remains skeptical of the ability of the Freundel Stuart government to finance its programmes and advised it of examining other options in order to achieve that objective.
He said the government should put the proceeds from privatization into a segregated fund to help reduce the debt “because the debt is the problem and the financing of the debt is the problem as well.
“All of us in this House…if we had a situation where we were cash-strapped but asset rich, we go and sell assets in order to be able to deal with our affairs.
“That is the same situation that is now facing the country,” Arthur said.
Earlier, Opposition Leader Mia Mottley disagreed with a position adopted by the government that the island has been able to reverse its downward economic slide and was now poised for growth in the coming years.
Mottley said that the government’s policies were “literally choking out every ounce of space we have to stabilise, trigger growth, or to protect the vulnerable in this country”.
The debate is continuing.