From right: Chairman of the Public Relations committee on the SSA Board, Barry Wilkinson; Minister of Environment and National Beautification Trevor Prescod; Chairman of the SSA Board Rudy Grant; General Manager (Ag) Rosalind Knight and Deputy Manager Operations (Ag) Shawn Phillips, admired one of the two trucks which arrived in Barbados on Wednesday.
THIS country’s next foreign loan repayment is for the prison at Dodd’s St. Philip, due later this month. And there is a question whether Government will be dipping into the more than one billion in foreign exchange reserves to make the payment, which is usually done in installment, or whether there will be a default of the amount due.
President of the Barbados Economics Society (BES), Shane Lowe, believes that given the suspension of external debt payments on June 1, last year, and unless there is an agreement between external creditors and the Government on new debt repayment terms, the Government will likely miss the payment on the Prison bond this month.
He told the Barbados Advocate that, in addition, he does not see this affecting the overall foreign currency bond credit rating given the current level of default. “However, in the event that the government comes to an agreement with the holders of the prison bond in quick order, there is no guarantee that the new terms on the security will require a payment later this month,” said the BES president.
The economist further pointed out that what is key is that any new repayment schedule that will be negotiated should ensure that the Government maintains adequate levels of foreign exchange reserves, a target under the Barbados Economic Recovery and Transformation (BERT) programme. Since the start of an IMF programme in Barbados, foreign exchange reserves have increased from $440 million to just over one billion through borrowings. However, former Governor of the Central Bank of Barbados, Dr. Delisle Worrell, is suggesting that the financing the country has obtained from the IMF, IDB and the CDB, should be used to address the imbalance between foreign spending and capital inflows, and Barbados’ deteriorating competitiveness in the economy.
Lowe added that, moreover, a resolution with external creditors and not with just those holding the prison bond would then prompt an improvement in the country’s credit rating. Under the terms of the loan repayment, Government has to fork out approximately $30 million to finance the debt. The Dodd’s facility was built at a cost of well over $200 million following the destruction of the then Glendairy Prison destroyed by fire in 2005. (JB)