Looking back, Dr. DeLisle Worrell might have known what was going to happen and wanted to have his take on the matter.
The last paragraphs of the bank’s short, blunt review of the performance of Barbados’ economy in 2016 ended with a recitation of a few principles from seemingly bland textbooks for some reason, how obvious they are and all.
I think maybe that was how the soon-to-be-fired governor let us know he was finally drawing his line in the sand.
People like me once felt it was way too late in the day – after all, hadn’t the good doctor been welcoming the government for years, racking up a national debt everyone said was too big?
When the rift between the finance minister and the governor of the central bank finally arrived, it sent massive shockwaves throughout the financial community here and elsewhere.
Ezra Fieser, who is Bloomberg Caribbean reporter wrote on March 9 that “Moody’s downgrade follows a March 3 cut in S&P and the Feb. 24 sacking of Central Bank Governor DeLisle Worrell, who threatened to stop funding spending. of the government “.
He quoted Royal Bank of Canada economist Marla Dukharan as saying that “the governor who was sacked would have rocked investors just because it shows some kind of instability in policy making. The governor had started to say how bad it really was ”.
Which reminds me to quote a few of Worrell’s officially approved last words:
“The fact that the government spends more on the current account than it receives on taxes and other current revenue is the reason for the increase in central bank lending to the government. It is generally accepted that any additional financing by the Central Bank should be avoided.
… The government’s dependence on the Central Bank to finance its deficit limits the ability of the bank to influence interest rates appropriate to the situation in Barbados, as is standard practice used by central banks all over. (Press release Dec. 2016, published end of Jan. 2017)
There may be other reasons the governor lost his job, but to the extent that he may have stood up and said, “We have to stop this madness” – and that taking this post so late in the day? his tenure may have helped seal his fate. – gives it the ironic twist you only find in the best soap operas.
You look around and realize that those who really caused the economic disaster we are facing are still in power. And still in denial.
The embarrassing comments about the degradation of S&P attributed to Prime Minister Freundel Stuart are not worth reprinting because they only show one person incapable of grasping the leadership role that history asks him to play. Instead of moving forward with the reforms that his party – and himself – ardently championed shortly after the start of his second term, he began to slow down.
Stuart took a full year from showing his usual minimal interest in the issues facing an economically unhealthy 50-year-old nation to focus almost entirely on the festive aspects of this wonderful achievement.
The only funny thing about Stuart’s inappropriate nationalist response to S&P’s latest downgrade is that as soon as he was done, an even more damning report from Moody’s arrived. It was a double whammy.
In fact, the government wanted the whole country to join in the festivities and forget about our economic problems, hoping that by then Independence Day had luckily come and gone, the foreign investment would have been in the kitty and saved every other day to come.
Do not believe me ? What do you say about that: “We have no doubt that we can and will develop our economy further and faster… once we have triggered
$ 1 billion in foreign direct investment that we have ahead of us with projects like the Sandals Casuarina expansion that has started, the Sam Lords redevelopment project that has also started, the Hyatt Centric and even the much-maligned Four Seasons Project which, God willing, can get started shortly.
The speaker? Finance Minister Chris Sinckler in last August’s budget speech.
In fact, he said, the money from the sale of the Barbados National Terminal Company, the first payment from the sale of the Four Seasons project, as well as the first transfer from the China Exim Bank for the Sam Lord redevelopment. would “all be carried out in the next four to six weeks to inject $ 350 million into central bank reserves.” That is to say in mid-October.
As far as I know, none of this has happened yet, except for the refurbishment of the Sandals Casuarina. And so, having recorded deficits since fiscal year 2012-2013 of more than eight percent per year, in that speech the finance minister said he expected the announced measures would reduce the deficit by compared to the 7.9 percent shown in the current fiscal year budget. ending at 5.8 percent.
Did this really happen?
Well, the estimates won’t be released until the day this article is published, so I can’t tell you at this time. But on top of that, the government has said it expects the deficit for the coming year to be less than five percent.
So I would expect all of the usual punches and bravado associated with the current government’s budget speeches and estimates, but it won’t matter.
We’ve reached the point where, unless a really serious overhaul of the economy is undertaken, Moody’s dreadful prediction may unfortunately be the only projection worth reading.
Moody’s said that despite the government’s efforts, the budget deficit remains large and credit risks have increased in Barbados. The debt burden would continue to increase over the next few years, he said, and pressures on domestic and external liquidity have increased. He added: “We rate the likelihood of a short-term credit event as very high, given the lack of fiscal adjustment and increasingly limited financing options.”
And what is a credit event? Well, according to investopedia.com, a “credit event” is a sudden change in a borrower’s creditworthiness that “calls into question the borrower’s ability to repay the debt”.
Looking back, Worrell may have come out just in time.