Cultural shift needed

Former Prime Minister, now Independent Member of Parliament (MP), Owen Arthur has expressed 

concern about the private sector’s over reliance on Government.

 

While indicating that he would not oppose the resolution before the Lower House to guarantee a $12 million loan for Needham’s Point Holdings Limited from First Citizens Bank to upgrade the Hilton Hotel, the St. Peter MP maintained that the action of guaranteeing such loans was only making Government’s debt higher. He contends that rather than asking Government to guarantee loans and provide incentives, they should be asking that Government create an enabling environment that would help them to make a profit.

 

“There is a very important study commissioned by the Caribbean Development Bank published in 2015 about debt sustainability and it did in fact refer to certain important conclusions. It sought to evaluate what had been the factors driving the quite substantial rise in Government debt across the Caribbean, not just in Barbados, and it came to the conclusion that the increase in debt really was not debt because of Central Government’s operations per se, but Government’s guaranteeing of debt of enterprises; Government having to subsidise institutions to cover their losses and it urged that if you are going to get out of the debt problems in the Caribbean, attention had to be paid to Government issuing guarantees,” he said.

 

He went on to note that a lot of the debt problems in the Caribbean region arise from the fact that the Government issues guarantees and while it is believed that they would be contingent liabilities, they become real liabilities.

 

“It is also true in Barbados Mr. Speaker that a lot of the private sector initiatives, are initiatives that they feel can only obtain if Government guarantees [them]. The point I want to make in this debate is that Barbados has to come, if we are serious about dealing with debt, we are going to have to come to a stage where enterprises involved in commercial activity have to treat the commercial investments as commercial investments and it cannot believe that the Government of Barbados must have to guarantee every commercial investment,” he maintained.

 

The former Minister of Finance made the point as he said that a culture has developed in Barbados, such that nothing happens unless Government guarantees it or that Government provides substantial incentives. As such, he is adamant that if the country is serious about dealing with its debt, then commercial investments have to “stand on the strength of their own intrinsic logic.”

 

“The word must go forward that the Government is not in a position to guarantee everything; the Government is not in a position also to indulge in what I also call corporate paternalism, to grant massive incentives every time there has to be investment in our country. Investments here and elsewhere must come more and more to stand on people taking risks and getting profit as a return for taking risks. I think we have to begin to change that culture, that nothing happens in the Caribbean, that nothing happens in the private sector in Barbados unless somebody says ‘how do we get the Government to guarantee this’ or ‘what is the package of incentives that we must get in order to make this happen’,” he said.

 

He warned that if an end is not put to this culture, the country stands to lose. As such, he says concrete steps must be made to ensure that it does not continue. (JRT)