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Caribbean L 18 ife, May 24–30, 2019 BQ
Barbados Prime Minister, Mia Mottley. Photo by George Alleyne
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KINGSBOROUGH
COMMUNITY COLLEGE
2001 Oriental Boulevard, Brooklyn NY, 11235
By George Alleyne
On the eve of its first anniversary
Barbados’ government
is basking in a positive report
on its financial restructuring
and removal of threats to international
business, atop several
social and economic achievements.
When the Mia Mottley-led
administration swept into
office on May 25, 2018, creating
history in the process by
being the first political party
in Barbados to win all available
parliamentary seats and
catapulting her into becoming
the island’s first woman prime
minister, it inherited an economy
suffering from persistent
decline with apparently insurmountable
debt.
Within days after her government’s
historic win of the
30 parliamentary seats, Mottley
revealed that officers had
discovered a Treasury in worse
shape than originally thought
with national debt being at
above 155 percent of GDP,
equalling over $7.5 billion in
outstanding loans received
from local and international
agencies, and in excess of $750
million in arrears for goods and
services taken along with other
financial commitments.
Added to this, no organisation
worldwide was willing to
lend to the country because of
its junk credit standing that
stemmed from more than 20
international financial rating
downgrades over the past 10
years, and international currency
reserves had fallen to a
perilous $220 million.
Consequences at home were
severe as the cash-strapped
past government had been
unable for years to pay citizens
their income tax returns and
deliver VAT refunds to businesses.
Meanwhile the tourism
sector, bread and butter to the
Barbados economy, was being
placed under threat as visitors
and travel agencies spread word
of sewage seeping onto streets
and hospitality businesses on
the south coast for years.
It was against this dismal
backdrop that last week, a year
after election victory, Mottley
accompanied by an International
Monetary Fund official,
strutted into a press conference
at which the IMF representative
announced the second straight
approval of a financial support
plan, and she revealed that the
European Union (EU) had lifted
its blacklist of the island as a
non-cooperating offshore business
centre.
To have in the first instance
obtained an IMF loan without
draconian conditions was by
itself an achievement. With its
junk status credit rating the
last loan the previous government
obtained fetched a repayment
at 7.5 to 8.5 percent, and
this was subject to rise with
every successive downgrade.
Instead of depending on
the IMF to design their recovery
scheme, new government
finance and planning specialists
devised a Barbados Economic
Recovery and Transformation
Program (BERT),
which the Fund approved within
months.
Coming with that approval
is a $290 million loan from the
IMF at the concessionary interest
rate of one per cent.
The money is paid out in
tranches subjected to periodic
reviews of the BERT programme.
The IMF announcement at
the press conference was one
such review.
“Barbados continues to make
strong progress in implementing
its ambitious and comprehensive
economic reform program.
International reserves,
which reached a low of US$220
million at end of May 2018, have
more than doubled since then.
The rapid completion of the
domestic part of a debt restructuring
has been very helpful in
reducing economic uncertainty,
and the new terms agreed
with creditors have put debt on
a clear downward trajectory”
the IMF official stated.
The island’s removal from
the EU blacklist opens the door
to international business companies
in the jurisdiction to
continue their worldwide operations
without fear of sanctions.
Barbados on an economic roll
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