Bad news - by admin June 30, 2015

Opposition Leader Mia Mottley is telling Barbadians that the International Monetary Fund (IMF) prepared a report on the Barbados economy days after the 2015 budget was presented, but Government is not making the document public because it contains bad news.

She told a Barbados Labour Party (BLP) public meeting last night that the report had cease-and-desist recommendations regarding the printing of money by the Central Bank. She also pointed to increased pressure on the foreign reserves this month as a result of a combination of foreign loans scheduled for repayment this month, along with applications for foreign exchange by Barbadians and businesses.

She said this increased demand for hard currency threatened to reduce the foreign reserves significantly below what was reported by Minister of Finance Chris Sinckler in his June 15 budget presentation.

“If (the budget) was called one month later, he [Sinckler] could not report to you foreign reserves in good position because the Credit Suisse loan had to be paid on the 18th of June…. and that is $88 million,” Mottley claimed.

“The Barclays loan from 1991 with [former Prime Minister Sir Lloyd] Sandiford has to be paid on the 1st of July, and that is another $87 million. On top of that, there are $100 million in [foreign exchange] applications that have not been approved. That comes to almost $280 million.”

In his budgetary presentation, the Finance Minister said “foreign exchange reserves have been restored and are stable at levels adequate to protect the fixed exchange rate. At the end of March 2015, reserves were $1,135 million or 16.1 weeks of imports of goods and services, up from 14.7 weeks of imports at the end of December 2014 and further up from the 12.5 weeks they had fallen to by the end of 2013.  This 16.1 weeks is well above the international benchmark of 12 weeks of import cover.  The normal daily pattern of changes in foreign reserves has now been restored, and the foreign exchange market is stable”.

Mottley told the rally that “if those applications (for foreign currency) are processed, our reserves [will drop] to a worrisome $800 million or thereabouts, if it is all done and they do not get in money from Sandals and other people”.

Mottley claimed that much of this information, and more, was contained in the IMF Article Four consultation report, prepared after a board meeting on June 19. Noting that this is a similar document to the one made public last year, she said Barbados authorities had “clearly refused to allow the publication of that report and the International Monetary Fund cannot release it to a fellow without the permission of the Government of Barbados”.

She asked the Government, “What do you have to hide? Are you ashamed that the IMF told you – as I have told you and [BLP economic advisor] Clyde Mascoll told you – you have to stop printing money, if not you are going to put the Barbados dollar at risk; that the IMF is telling you that the arrears, the money owed by the Government of Barbados, is way too much; and for Central Government alone, it is four per cent of GDP, or over $340 million; and that does not include the monies owed in VAT refunds and tax refunds?”

Mottley said that consistent with advice coming from her party, “the IMF has told (Government) that the GDP data that the Government is giving the people of this country is unreliable, and that the Central Bank has to stop doing the data and let the Statistical Services (department) do it”.

Promising that Dr Mascoll will say more later this week about the information which has not been shared with the public, Mottley said of the IMF document: “It exists, but it is not for the Barbados Labour Party to release it, and I shall not do that. It is for the Governor of the Central Bank and Chris Sinckler to release it . . . . for all of Barbados to be able to see it”.