Borrowing from Central Bank must come to an end

MINISTER of Finance and Economc Affairs Christopher Sinckler said Government’s borrowing from the Central Bank of Barbados will have to come to an end.

He told the House of Assembly that the CBB financing peaked at over $700 million last year. Sinckler admitted that the steady growth in Central Bank financing has proven not to be the most appropriate.

The Government official has said that it is not sustainable, and it does look good.

Saying he has never called the CBB and directed them to print money, Sinckler said there is a cash flow committee in the Bank which looks at the requirements of Government and decide on accommodating the Government.

He agrees it is not the most ideal thing to happen and as such Government has to bring its deficit under control and then stop the accommodation by the Bank.

The Minister said the reality is that there is too much money creation and it has to change, and Government intends doing that. Government, the Minister said, is committed to a smaller deficit and that is included in the Estimates. It is the aim to have the deficit brought down to 4.4 per cent by the end of the next financial year.

“It is committed to a strategy to increasing private flows and explore additional options for assets sales,” he promised. The Minister said, “Government efforts to shield people has cost the Government.”

The Minister pointed out that Government’s issuance of domestic securities has jumped by almost $400 million a year and that while commercial banks and the National Insurance Scheme carried the burden there has been a reliance on the CBB.

The Minister said that on average each year since 2000, commercial banks have purchased $200 million and as they become more risk averse they reduced their appetite at a time when private sector demand for loans remained weak. He said that people are buying short . (JB)