Options other than Debt Write-Off: DLP President Criticizes Mia Mottley-led Administration's Policy Decision

By Shamar Blunt

The Mia Mottley-led administration had other options, apart from writing off $1.3 billion in debt owed to the National Insurance Scheme (NIS), to deal with the economic circumstances it discovered when it was voted in in 2018.

That was the position of Democratic Labour Party (DLP) president Dr Ronnie Yearwood in response to Prime Minister Mottley saying her government had no choice but to undertake a debt restructuring exercise because of the debt it inherited.

Yearwood told Barbados TODAY that while the DLP acknowledged the Mottley-led administration had to deal with challenging economic circumstances when it came to office, the decision to write off the $1.3 billion was a deliberate policy decision that was really not necessary.

“The current administration, there is no denying, inherited debt due to many factors, including a global financial crisis of 2008, that had to be addressed. The point I am making is that of all the policy options open to the Government, it deliberately chose to have the NIS bear the burden of a $1.3 billion write-off. The Government had other choices and governing is about choices,” he said.

“As has been explained, many factors affect the strength and viability of a Pay As You Earn (PAYE) scheme such as our NIS. The Government did not restructure interest rates and/or loan maturities as was the case with the vast majority of the debt restructuring for private debt. The Government, therefore, made a deliberate policy choice to wipe out the people’s money as if they were nobody. That decision could have had no other outcome than to harm the NIS and hasten the need for reform,” the DLP leader insisted.

Despite both Mottley and Special Envoy to the Prime Minister on Investment and Financial Services Professor Avinash Persad insisting that repaying the $1.3 billion, as has been the call from the DLP and others, would reverse the gains of the debt restructuring progamme and put the Barbados dollar back in jeopardy, Yearwood insisted repayment could be done over a period of time.

“The reality is, and the DLP said, the payback to the NIS should be done over a long-term period. No one is saying pay back all now. So the foolishness coming from Mr Persaud and the Prime Minister about not paying back the NIS is just that – foolishness. We are talking about a 15, 20-year or more period.

“Putting the $1.3 billion debt the Government owes to the NIS back onto the books of government will not take the debt to gross domestic product (GDP) ratio to over 170 per cent as suggested by Mr Persaud. The addition of $1.3 billion will take the national debt to just over $16 billion from currently almost $15 billion. Given the Barbados economy is over $12 billion in size, including the NIS debt would put the debt-to-GDP ratio at just over 130 per cent,” he said.