‘TAPS TURNED OFF’
ONE of Barbados’ leading Bankers is adamant that commercial banks will not be lending to government unless the country’s financial situation changes.
According to President of the Barbados Bankers’ Association (BBA), Donna Wellington, “It is critical that we know that who we have lent to, can pay their debts.”
She was at the time presenting the topic “Update on the Current Fiscal Situation – What’s going on with the Government of Barbados”, to the Hope Road Church of the Nazarene in St. Lucy, on Sunday night.
“When banks see things getting out of hand and we see someone being unable to pay their debt, it would not be prudent for us to lend that person any more money and that is why commercial banks ‘turned off the taps’ since about 2013 and have not lent the Government another cent because we knew anything pass where they were was unexpectable, and not anything we should have more of your money in.
“We would not lend you (the public) money if we knew you could not pay your debts,” stressed Wellington, who is also Managing Director of CIBC FirstCaribbean International Bank (Barbados).
“We are in 17 countries and any government that we see in this situation we would also ‘turn off the taps'.”
With a debt-to-GDP ratio above 60 per cent recognised as dangerous, the Banker indicated that currently Barbados’ debt of 157 per cent is the highest in the Caribbean.
She highlighted that Trinidad & Tobago has a ratio of 61 per cent and Bahamas at 67 per cent.
“They said that Barbados is 108 per cent but that was before they added in the National Insurance Scheme (NIS) and Central Bank which they must add in because that money has to be paid back… Up to early this year they were still quoting the 108 debt-to-GDP; the true number is 157 and it is actually growing every day because what we are trying to do now is to figure out all the other stuff that is owed – such as CLICO, British American, University of the West Indies, Barack, etc.”
Wellington described potential investors as “nervous", sharing with the congregation that, “There has not been a lot of growth, there has not been a lot of people doing foreign direct investment… There is not a lot of that going on in Barbados now because everybody is nervous about the 157 per cent debt-to-GDP. They are wondering what is going to happen to this country – are we going to default on our debt?
“There are actual corporations in Barbados that would like to do big things; they want to build stuff – but all of them tell me they will not do anything until they understand what is going on here in Barbados,” she said, explaining that this is a lack of confidence.
“When there is a lack of confidence in the investment area, it causes a lot of problems because people are just nervous… It all comes from the fundamentals of what’s happening with the government.” (TL)