Minister of Finance Chris Sinckler persuaded parliament last week to raise government’s borrowing limit from 1.75 billion to 2.75 billion. This single act ensures that government can float Treasury Bills and other government securities as the need arises. One may reasonably assume that for the government to have expanded its borrowing capacity it raises the issue of a concern for cash flow. The Minister’s explanation that seeking approval for one billion at one sitting pre-empts the need to return to parliament is ‘interesting’.
On the international front Barbadians ‘heard’ that Minister of Finance Sinckler and Governor of the Central Bank visited the UK recently to enter the capital market. As recent as 2011 Minister Sinckler publicly expressed a reluctance to accumulate external debt. His preference was for the government to leverage the flexibility of a highly liquid local market. Of late however we have heard that the lack of appetite for government securities has forced government to rethink this strategy.
About protecting the international reserves the government has made this a priority, relatively so. Although an adequate number of weeks imports provide Barbados safe cover, Barbadians must be concerned that shoring up the forex reserves of late required the sale of Republic Bank and Emera shares.
One may speculate that the government has been advised by the Central Bank the need to match expected forex outflow with borrowings. Our junk status will probably add to the cost of the loan but the thought of being snared by the IMF should make the cost of the loan palatable.
Now that the political rhetoric has faded post February 21, 2013, the country yearns for serious debate about the economy. Do we need a stimulus or not? Which state assets must be privatised or divested from if some prefer the euphemistic form. How should we rethink our tourism strategy? Do we need to force the rollout of alternative energy? It seems incredible that five years after the global economic meltdown Barbados is unsure of an economic plan.
What concerns BU as well has been the muted voice of Sir Frank Alleyne from public discourse on economic matters.