PM: Printing of money necessary to pay bills

Acknowledging that Government should not have to turn to the Central Bank to have money printed to finance government deficit, Prime Minister of Barbados The Rt. Hon Freundel Stuart has however noted that the present
administration has done so because “government has bills to pay”.

The Prime Minister sought to address the issue of the printing of money as he made his contribution on the Appropriation Bill, 2017, this week in the House of Assembly.

“I have heard it in the House throughout this debate, the issue of the printing of money. The printing of money results from the running by government of deficits, and we have had to resort to Central Bank financing from time to time – in fact, fairly consistently in recent times,” Prime Minister Stuart remarked.

“A Central Bank does not finance government deficit because it is wicked, [it does so] because government has to pay public officers, government has bills to pay,” the Prime Minister later added.

“You shouldn’t have to rely on Central Bank financing for those purposes, but I am saying, given the context in which we have been operating, given the last few years in the wake of this crisis…we’ve had revenue challenges whilst our expenditure has been fairly consistent, and we have had to do this. This is not from everlasting to everlasting. It is not designed to be from everlasting to everlasting,” he meanwhile stressed.

Stuart suggested that other countries have resorted to the printing of money, or in some cases what is called “quantitative easing”, when they have had large deficits.

“We like to behave as though Barbados is some place cordoned off from the rest of the world and that a lot of the things that have happened here have not happened anywhere else,” he said.

“I know that in the United States of America, during the crisis, that the Federal Reserve was printing money to deal with the fiscal deficit of the United States of America. I know that. And I know that a lot of the debt incurred by the United States of America during that period when it was having too large deficits, a lot of that debt was taken up by China and Japan, even before the Federal Reserve got in, and we have had to deal with that,” he pointed out.

“These things are not new, they are [not] desirable in the context of our overall macroeconomic aspirations, but sometimes they become necessary, and you only have to ask yourselves if they are not done, what the consequences will be to the society,” the PM concluded.
(RSM)