Barbados Opposition Leader Challenges Government's Borrowing Resolution: A Closer Look at Debt Repurchase and Re-Financing

Opposition Leader Ralph Thorne has challenged Government on its decision-making with regard to Barbados’ debt, as the House of Assembly debated a resolution yesterday, in which Government is seeking Parliament’s approval to borrow about $600 million from three commercial banks in Barbados for debt support.

Minister in the Ministry of Finance Ryan Straughn introduced the resolution to borrow the money from CIBC Caribbean Bank (Barbados) Limited, Scotiabank (Barbados) Limited and RBC Royal Bank (Barbados) Limited, on terms and conditions contained in a Sustainability-Linked Loan Syndicated Facility Agreement, to buy back an approximate equivalent amount in high cost Government of Barbados debt.

Straughn acknowledged Barbadians expressed concerns about the country’s high debt level, but explained: “The use of this $600 million is to repurchase existing debt [of which] some of the interest rate is as high as eight per cent and we are going to repurchase some of that debt in order to reissue at a lower level, in order to be able to refinance some of the South Coast Sewerage Plant.”

He added: “Because of the debt situation that we were faced with, we had to re-structure in order to create fiscal space, meaning resources to purchase garbage trucks, resources to purchase buses, resources to be able to expand the capacity of the Queen Elizabeth Hospital, resources to address a myriad of issues.”

However, the Opposition Leader took issue with the manner in which Barbadians were first notified about the resolution, accusing Government of introducing

it to Barbados “by way of a newspaper article” before it was presented in the House.

Thorne contended the resolution “increases the national indebtedness”, charging that generations of Barbadians would be left to repay the high debt being incurred by the Barbados Labour Party administration.

He posed four questions to Straughn, insisting that the minister “owes it to this country to give the answers”.

“Are debt-swap arrangements pursued by countries that are experiencing difficulties in paying their debts? Is Government replacing local debt with foreign debt? Was it not Government’s stated objective to place more reliance on local debt?” Thorne asked.

He also questioned whether sewage was being pumped into the sea on the south coast, referencing Straughn’s claim that [sewage] was one of the areas to be addressed in what the Christ Church East Central MP had earlier described as “the single largest transaction” that the BLP Government had ever undertaken.