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Economy Out to the Baller Sir Frank

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…

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Sir Frank Alleyne
Sir Frank Alleyne

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.      

  1. BAFBFP Avatar
    BAFBFP

    101 comments … just in time

  2. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    Hal Austin,

    In our 11.36 am post, we were wrote about the fact that in Barbados there are no moral forces that are acting now to establish required institutions and processes based on and that are there for determining, in the main, what is, ought to be morally right or wrong, good or bad, fair or unfair in the country.

    Now, given that you said in your May 22, 2013, 11.01 am post ( and we agree with so much of what you wrote in it) , that we were right in our May 21 2013, 10.36 pm post to you, is it possible that you can help us establish here in Barbados a social institution that will deal with the evil wickedness of TAXATION in Barbados??

    We take notice of the fact that you are well grounded intellectually, pretty historically inclined yet seemingly having vast personal practical experience in the social realm of things in esp. Great Britain in many of your contributions to this BU blogsite.

    Indeed, it would be great if you can help us develop a template, plus more, for this social institution.

    PS. You do not to agree with us 100 per cent on every thing we have said on here about TAXATION.

    PDC

  3. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    ac,

    In response to your May 22, 2013, 12.32 pm post, we have to say the following to you, that there shall any time the PDC comes to office as part of CUP government that there will be, yes, a greater corporate approach to managing of the affairs of the government of this country.
    This will be realised to some extent by the PDC insisting on the setting up of new state management enterprise to replace the Crown/Ministry if they would still be around at the time. This state management enterprise will be owned by all the partners in this state management enterprise.

    An executive coalitional Cabinet – which shall also be elected – will be at the helm of this enterprise.

    This Cabinet will have about 17 to 19 members comprising it. Each member will fill one position and only one position at a time in the Cabinet. Of those 17 to 19 positions, 10 to 11 positions shall be vied for only by parties in Barbados, 4 to 5 positions shall only be vied for by non-party political groups in Barbados, and 3 to 4 positions to be only vied for by independent political figures.

    The President/Vice-President of this Cabinet shall, in the first years of the coming into existence of executive coalitional government for Barbados, be included among all those persons that would be victorious in vying for their respective positions therein the Cabinet upon the uncontested results of the polls.

    In such years, though the President/Vice-President of Barbados will be elected to those positions by all other members of the Cabinet voting for the respective candidates to such positions.

    With the evolution to another stage in the constitutional ordering of the Presidency of the government of Barbados, the President and Vice-President will be directly elected by the voters into those positions, whereas as all other members will be directly elected by the voters to their ordinary positions in the Cabinet.

    The type of electoral system under which such polling will take place shall be a variant of the proportional representational system, which the PDC shall insist on changing to from this backward deficient first past the post electoral system.

    All judges of the High Court or the Court of Appeal or the Final Court of Appeal in Barbados (the latter shall be sought after under a coalition government of which the PDC shall be part of) – shall be elected by the voters to their various positions in the Judiciary.

    A simple majority electoral system shall suffice for the election of these judges to their judicial positions in the government of the country.

    Under this governmental system, all of these persons – all of whom shall have to be Barbadian – that are elected into any positions of government in this country shall before taking up the reins of their offices swear appropriate oaths of allegiances to the people of Barbados.

    There shall also be put in place a system of recall for all people that are elected into the government in this country, at the national, parochial, constituency, judicial and other levels.

    So, there you go, ac.

    PDC

  4. Hal Austin Avatar
    Hal Austin

    @ PDC

    You are right to focus on taxation. The real unfairness of the system are business taxation and property taxes.
    Both are framed with a bias towards business and the wealthy. It is why I have said that the expatriates who monopolise the West Coast are freewheeling on ordinary taxpayers.
    The evidence is there: the inland revenue can tell us how much they pay in taxes, how much they pay in national insurance for any domestic or security staff they employ; the land tax department can tell us how much they pay in taxes, and we can have their property valued annually; business loans are tax free.
    We can go on, but you got the drift. Then we have private homes owned by companies – that is scandalous; we also have motor vehicles used for domestic purposes awhile owned by commercial organisations.
    We need to reform the tax system.
    Keep it up, PDC, you are on the right track. Taxation should be used to redistribute the nation’s wealth, not rob the poor..

  5. Colonel Buggy Avatar
    Colonel Buggy

    How funny that we are hearing so much recently of a much padded Civil service, where the government is finding it difficult to meet the demands of salaries and wages,and as the union boss, admitted today, layoffs may be in the making. But I am bamboozled as to why, in these hard times ,is the government abandoning repairable / serviceable public property, in preference to paying sky high rent for privately owned office blocks. We saw this in its glory ,or folly, just before the last general election when a Ministry,deserted Sherbourne -LES Centre and took up residence at the east wing of Tri-Mart building in Haggatt Hall with all the trimmins of covered car parks , the lot. This weekend ,another government department will be moving into a recently completed privately owned office block immediately to the north of the same Trimart building in Haggatt Hall, next to the ABC Highway.
    It would be interesting to know who own these buildings, and how much is it costing the already hard pressed taxpayers of this country.
    And no wonder, (subject to correction) only just this morning I noticed that one prominent Bridgetown businessman has swapped his Mercedes Benz for a Roll Royce, if you please.
    Things will never change in this island, we will always remain under the evergreen tree in the plantation yard, while assisting others to mount their horses of success and prosperity.

  6. Crusoe Avatar
    Crusoe

    David,

    Two measures to address the fiscal deficit that need to be implemented asap are:

    – reduction in public workers salaries, from Ministers down, by 10%
    – an increase in the VAT rate to 20%.

    This needs to be done asap. On the wage reduction, it is better for everyone to cut by 10% (actually 6.5 % or 7.5 % net after tax), than for 25% of public workers to go home within the next year.

    On the VAT, it is a necessary tax collection, that is less recessionary and covers a broader band of income earners, including those who dodge taxes, than any other. The additional level is necessary, along with the wage cut, to pull down the fiscal deficit,

    There also must be a halt on any short and medium term building of government housing expenditures.

    And lastly, anyone talking about the VAT being ‘evil’, is talking xullshit.

  7. Crusoe Avatar
    Crusoe

    ‘H’al Austin | May 23, 2013 at 4:37 PM | @ PDC
    It is why I have said that the expatriates who monopolise the West Coast are freewheeling on ordinary taxpayers.
    ….Taxation should be used to redistribute the nation’s wealth, not rob the poor..””
    ——————–
    1- Expatriates who monopolise the West Coast???? WTF? This is the sort of nonsense that is bringing the economy down. The West Coast owners from overseas, most of them, can live anywhere they want, they choose to spend their money here, we should be glad. And the foreign exchange they bring in to spend, is valuable. You got something against expatriates? The only large viable hotels is Barbados are all owned by overseas interests. They are viable…for a reason.

    2- Tax is not to ‘REDISTRIBUTE WEALTH’ it is to ensure that the social services and administration of a country can be paid for, THAT IS ALL.

    Or you think ‘cuh dear’ he got less money or he earning less money than he, leh we tax he hard and mek he pay’. Backward tail thinking based on jealousy and nonsense.

    If the above nonsense is allowed to become the ‘norm’ of thinking we can literally shut the country down and go overseas.

    Some of the crap being written here is past ridiculous.

  8. Crusoe Avatar
    Crusoe

    Oh and by the way, within the next two years the foreign exchange earnings are going to be hit very hard indeed, some of you are living in lala land.

    ‘Expatriates’…many will be leaving due to a drop in businesses for very specific reasons…..already happening, and there go the rents, wages, spending etc…all from US dollars… we are in deep xhit.

    Sure Hal Austin will be glad based on the crap above….but I wont. You really think this country is self sustaining?

  9. Crusoe Avatar
    Crusoe

    Within 5 years here (if not 3) unemployment will be around 40%.

  10. Prodigal Son Avatar
    Prodigal Son

    Just asking the person who blogs as “Driver”??

    1.What is the connection between Kyffin Simpson and the Transport Board?

    2.Who is paying for the new buses?

    3. Did Simpson Motors advance money to the government to help with salaries last month?

    4. What will happen to the much touted free bus fares if Simpson Motors take over the TB?

    5. What will happen to the workers there?

    I am just asking.

  11. newblood Avatar
    newblood

    @Crusoe

    how r going to cut pblic officers salaries by 10%? Wasnt an amemdement made so that pblic officers salaries CANNOT be cut? R u asking for a volntary cut? When the govt saw the need to tax allowances there was a hue and cry? Did u remember?

    While it is recognized that vat is one of the fairest form of taxation, an increase would be chaos. The govt cant even get all the vat that is collected @17.5%, why then they will collect all @20%. Further, look how the person who was in charge of vat and allowed the arreas to skyrocket get promoted for inepness as Comptroller of Cstoms(ag). we promote incompetency.

    I will agree that there needs to a rebalancing of the pblic service,but to do so in one fell swoop will call a lot of social dislocation since the private sector iws not hiring bt rebalancing.

    The private sector needs to stop trading and get into serious business, because all the private sector does is buy and sell, in most cases. They rip off the barbadian consumer. Quite recently i happened to be away from bim, say some red onions, checked ot the price and i saw tham selling for times the price in barbados.

  12. David Avatar
    David

    @Crusoe

    This is why communicating to the people in times like now is absolutely critical. In the same way the DLP used the Transport Board Ad and pensioner to good effect the same can be done to communicate other messages of government. We are at the point where we have no options left.

    On the subject of reducing public workers salaries, anything is possible provided they can get the law amended in parliament.

  13. Dr Love Avatar
    Dr Love

    @Newblood.
    Know your ONIONS.
    The Government place down Princess Alice Highway took CONTROL of ALL ONION imports.
    SOMEBODY pockets getting REAL FULL>
    They LAND onions in BIM for 10.50cents US. a Bag.Somtimes as LOW as 6US$ a bag.
    THEY KEEP THE SUPPLY chain PHUCKED UP so that EVERYBODY Scrambling for onions.
    They sell the ONIONS to vendors and retail for B$50 a bag OR MORE and EVEN keep MANUFACTURERS SHORT and CRUCIFY THEM On prices.
    (THEY do the SAME SHITE with CHICKEN WING and TURKEY WING.)and then talk real shoite about Barbados SHOULD EXPORT.

  14. David Avatar
    David

    @Dr. Love

    You are correct but you already know Barbados is a buy and sell place, ask Sir David Seale.

    Where is the innovation in determining spreads?

    Why should a single person or entity have the agency to import foodstuff?

  15. Crusoe Avatar
    Crusoe

    @Newblood,

    Fair points, but sorry, there is no logical alternative. On the ‘hue and cry’……..unfortunately we revisit ‘like it or lump it’ and there is no choice.

    As David says, Parliament can legislate whatever it wants, even for you and I to wear blue and yellow clothes only, if it wishes.

    On the dislocation, much less than if we have to lay off a huge number of public workers in a year or two.

    Also, the 10% (gross) reduction is manageable to households (better than lay off), albeit I agree unfortunate.

    The increase in VAT, necessary and not excessive. In the US people pay state + federal taxes on purchases.

    On the collection of VAT, I agree, nonsense that arrears are allowed. One is a TAX COLLECTOR for the Government, that is not the retailers money. Simply introduce harsh penalties for non payment and act on them.

    It is action that count. The people in Greece and Cyprus also refuse to accept their position, but it is what it is. Let us act before we are any worse.

    We need to understand that the world in really , going to hell in a handbasket, economically, now the morons are pushing terrorism onto the streets of Russia (an act foiled by the Russians a few weeks ago), US and UK.

    Result will be more chaos. We thus need to be prepared.

  16. Hal Austin Avatar
    Hal Austin

    @ David

    David you are right. To protect jobs the government should have imposed a pay freeze five years ago, instead of an immediate pay rise. The unions are also to blame, with one public sector union putting in a ten per cent pay rise. This is not just irresponsible, but criminal.
    But what you got were greedy members going along with that silly claim rather than getting rid of the officials proposing such a pay rise.
    The other thing is, as I have been saying all along, members of parliament should not only have a pay freeze, but a pay cut. They must give leadership, if they know what that means.
    But the people get the leadership they voted for.

  17. Hal Austin Avatar
    Hal Austin

    @ Cruscoe

    The information on expatriates is available to the government, only it may mean pulling it together.
    Here is a job for our highly paid academic economists at UWI.
    Expatriates have to register any foreign direct investments (bank accounts) with the central bank in order to be able to remove that money;
    they have to make declaration to the inland revenue, whether or not they are domicile for tax purposes; they have to make payments to national insurance and the inland revenue for any staff; they have to pay land tax and ultility taxes.
    I know we do not make good use of our big data, but a fulltime economist or journalist (a job for the newspapers) can easily do this.
    Some of us have day jobs, if not I would embark on this. But on the other hand, officials do not give out information. Barbados is a very secretive society.
    Tell the inland revenue to publish the massive among of data it has on declared earnings: who earns what, are they in the private or public sector, whose incomes are what, does it comes from investments,; the land tax department can publish figures on who pays what and the value of the property without naming names.
    Transparent official figures will prevent those people who just like the sound of their voices.
    Until then, talk of who contributes what to taxation will remain opinions or at best speculation.,

  18. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    The creation of a post-TAXATION society for Barbados shall be one of the most fundamental goals of a coalitional government of which the PDC shall be part of.

    The TAXATION system is one of the most EVIL and WICKED things that some men many years ago invented in this world.

    The TAXATION system is one of the most atavistic and backward of social systems that currently exist anywhere in the world.

    In Barbados, this very inhuman outrageous system has – over the years – helped to create massive and – in some cases irreversible – social, psychological, political, financial, and material problems for various classes and sectors of our country.

    Could any one recognize the emotional dwarfism that goes along with some persons in Barbados still thinking that they are’ paying’ TAXES to which ever TAX thieving government departments, when in truth and in fact the government continues on a daily basis to STEAL ROB them and so many others of portions of their remunerations??

    Imagine the very serious psychological damage that has been done by the government and by some others over time to such individuals in Barbados, and that has been found to have been socially passed on by them (the latter) to some others present and to come ?? ( thank goodness that so many people in Barbados already know that TAXATION is theft).

    Imagine that political schizophrenics like Mr Owen Arthur, Sir Lloyd Erskine Sandiford, Mr Freundel Stuart have over the years been seeing the wickedness of the government of Barbados stealing plundering portions of the remunerations of persons and other entities in Barbados??, yet they themselves have not been ‘man enough’ courageous enough to walk around and steal rob any persons of any amounts of their remunerations, primarily because they damn well know that it is totally wrong to steal from others and would not therefore do it!!

    Indeed, this demonic totalitarianistic TAXATION system has no place within a very spiritual altrustic society like Barbados!!

    The PDC has already evolved for Barbados modernistic, humanistic and substantial political financial strategies and systems that will, whenever implemented, make sure that the government realises far more of its own revenue than it is currently doing, and that will make sure that the Government and, of course, thousands upon thousands of others in Barbados (persons and other entities) are able to better and more correctly access out of the core financial system, the monies that belong to the people of Barbados, without at the same time incurring the impossible – MONEY DEBT, and at the same time, and in the government’s case, without its violating, but especially moreso its being made to have greater respect for, the income and property rights of others in a post-TAXATION society.

    PDC

  19. Caswell Franklyn Avatar
    Caswell Franklyn

    David

    In order to cut public servants’ salary, the Government would have to get he co-operation of the Opposition. Public servants’ salaries are protected constitutionally: Govern would need to pass an amendment to the constitution in order to do so, but they only have a two-seat majority.

  20. David Avatar
    David

    @Caswell

    If we are headed over a precipice why wouldn’t MAM and the Opposition cooperate?

    Yes a naive position to hold.

  21. Caswell Franklyn Avatar
    Caswell Franklyn

    David

    Cutting civil service salaries should be the last resort. When Government has tried everything else and that is it final option, I would give my support. However, the politicians should remove themselves from the tax collection process and allow the civil servants to do their jobs. Allow them to go after the $25 million in VAT owed by Courts and the countless millions owed by their other cronies.

  22. David Avatar
    David

    Interesting to read DLP stalwart and economist Tennyson Beckles calling for a new model because the Barbados economy is grinding to a halt. Did we hear this dialogue BEFORE the last general election?

  23. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    It is very instructive listening to today Brass Tacks calling program – listening to those who are the panellists and the callers who are sharing some of their experiences at this time of profound political financial material depression in this country.

    One caller has claimed how he has decided to what – he called – sell his land in order to ease the financial burdens on his family after receiving a threat in a letter from a financial institution (which he did not identify in partly reading the letter on the airwaves) that by a certain time if he did not make good on his account, how it is their intention to so-called sell the land to recover what is so-called owed to them.

    This person seemed very surprised that this particular financial institution is behaving like this so abruptly, after – in his own view – being a good client over the time.

    The point is that the these financial institutions are among the prime local culprits in making sure that things become harder financially materially for many individuals and other entities in this country.

    Believe it or not a future coalitional government of which the PDC is a part of shall assist in reining these very unproductive rift raft institutions in this country.

    PDC

  24. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    Now the program has taken a bad turn, with much of it being taken up by the bland useless utterances of Steve Belle and Algernon Yearwood of the COB credit union about the how, et al, they have been relating to clients who have run into financial difficulties in making so-called loan deposits.

    But you know, the moderator introduces from time to time listeners to the program by saying the program is about the economic crisis in the home, yet talks takes up too much time dealing with an agency that is part of the financial process in this country of making things harder financially for many Barbadians.

    Many Barbadians need to hear about the social and corporate suffering of many others of their kind.

    The phone lines should been damn cut on those too individuals, as that these individuals and their institution have access to various media and other public fora to put out their propaganda to those in the public domain who would swallow hook line and sinker their trash.

    PDC

  25. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    It is really tragic hearing how a UWI student who having lost her home (presumably to a financial institution) and is still making deposits in relationship to it, is so saddled with so many financial burdens, notwithstanding the financial assistance she is claiming she is getting from various local sources.

    The fact that the listening public is made to hear comments of the various persons about their social financial hardships asks the question: beyond acting as a medium through with such persons are able to relate such experiences to others, of what fundamental purpose is VOB hosting this type of program then?

    Why not use the program to mobilize persons in Barbados against these two stupid backward visionless DLP/BLP parties for helping to put hordes of Barbadians into extreme social material financial difficulties??

    Surely, such would be far eminently better than listeners being made to listen to the moderator – who we have not heard say what her name is – and the other panellists and a few callers simply exchanging views with one another and craving sympathy – albeit that both these things are still important for many people to perceive.

    The damned DLP and the blasted BLP must go!!

    PDC

  26. Hal Austin Avatar
    Hal Austin

    I have written in this blog about the fraud of mortgage indemnity guarantee. It is theft and mortgage lenders impose it on borrowers in Barbados.
    It was banned in Britain a long time ago and is still in operation in Barbados.
    The other organised theft is so-called property auctions in which untrained lawyers set themselves up as auctioneers and then decide illegally who to sell the property to.
    The principle of forbearance and repossession is that the property should be sold for the highest price.
    I once made an offer for a building, had to fly out of Barbados before the auction, but offered to bid by telephone. I hedged this by asking the law firm, a well known firm, to inform me of any offers before accepting any bids.
    To this day they have not even acknowledged my letter. What they did not know was that I knew someone working in the firm who kept me informed.
    I did not bring a case against them because I am aware of the state of Barbados justice and a firm of that reputation would wipe the floor with me.
    By the way, have readers noticed that the government is calling an economic conference on June 28. In other words, they are dredging for ideas.
    I have always said that Stuart, Sinckler and Worrell are out of their depth.

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