Amber Alert

Amber Alert “The negative outlook on Barbados reflects the growing imbalances that the inconsistent fiscal and monetary policy mix has caused.” – Olga Kalinina, Standard & Poor’s Economist

In our view this is the most damning criticism of David Thompson’s performance as Minister of Finance since he assumed that office some sixteen months ago. If ever there was a vote of no confidence in Thompson’s ability to manage our economy, this is it. We are not surprised, because it is a criticism that our leader Mia Mottley has made of him without apology. She knows the importance of consistency in maintaining confidence in the Barbados economy.

No amount of sugar coating that the region is under fallout stress from the global economic downturn and that Barbados is not unlike other countries whose ratings have dropped can negate the full import of Ms. Kalinina’s words. The Barbados Labour Party has warned repeatedly of a government adrift and unsure of which path to take; of a government that waits far too long to take even reactionary decisions, much less pre-emptive or proactive ones. The Prime Minister’s ‘wait and see’ approach to economic management singles him out as a ditherer that the country cannot afford in these trying times. And what are these inconsistent policies of which Ms. Kalinina speaks?

 Balanced budgets or deficits or both as the DLP prclaimed. Subsidies, no subsidies – yes subsidies! The government committed itself to a balanced budget and imposed the single greatest tax imposition on Barbadians in our economic history. This was done against a background of rising oil prices, which in his misguided wisdom the Prime Minister passed on to the productive sectors and the average Barbadian. Miss Mottley’s opposition to this policy has been well documented. With the implosion of the global financial markets, the Prime Minister’s response was to organize an economic talk shop two months after the Lehman Brothers collapsed.

This report is yet to be published, although he has commented on it as being a mid-term strategy. So back to the ‘wait and see’ stance. Then there was much ‘too and fro’ about whether we had or should have a stimulus package. School fences and a highway improvement project already on the cards were cited as evidence of such, amidst much continued ambivalence by the Prime Minister as to whether this was the course we should take. Under pressure to explain the fall in foreign reserves and the unrealistic revenue estimates contained in this year’s Estimates, the Prime Minister and Minister of Finance decided that he had in fact implemented a stimulus package.

 Both Mia Mottley and Owen Arthur said then that the time for stimulus packages had already passed and that the failure to implement them sooner – now meant that we should be engaging in defensive measures and that a stabilization package is what is now required. We shall observe with keen interest whether such a package is contained in the Prime Minister’s Budget. While no country enjoys a downward adjustment of it’s rating or even its outlook, if there is a clear plan to implement measures that may lead to a downgrade, but yield improved results in the short and medium term results, then Ministers of Finance view them as a necessary evil.

When however, there is no plan or an inconsistent plan, then the chance of improvement becomes more remote as does an upward revision of the outlook. This is the unfortunate position in which we find ourselves today. The Prime Minister has no clear strategy for protecting the Barbados economy and no policies to ensure its growth. There is an awful sense of déjà vu hanging in the air.

Would it be too much to hope for – that the Prime Minister relieve himself of the Finance portfolio and save us all the certain hardship we shall face by his present insistence that he knows what he is doing?

Danger on the Horizon

Throughout the course of our seventy years of existence as servants of the people of Barbados, the Barbados Labour Party has never failed to face the challenges of defending the interests of the people of this country.

 

It has never been in the nature of our leaders to sit idly by in calculated defence of their own self interest and well being, while challenges face this island and threaten to devastate the lives of thousands of our fellow citizens.

 

It is therefore in the spirit of that noble tradition that we remain focused and vigilant about the need to protect the interests of 40,000 Clico Policy holders here in Barbados, notwithstanding the flippant manner in which the DLP treated that concern in the recent no confidence debate.

 

We feel even more fortified in that commitment, when we reflect on last week’s declaration by St. Lucian Prime Minister Stephenson King that his government is taking steps to protect St. Lucians who have invested in the Pan-Caribbean Insurance Company CLICO.

 

Of great interest to us and unfortunately, of equal concern is the fact that Prime Minister King has now introduced yet another Pan-Caribbean company doing business in Barbados into the equation.

 

Prime Minister King is reported to have named CLICO and its Sister Organisation British American Insurance in a statement to the St. Lucian Parliament.

 

Press reports on that Prime Ministerial Statement indicate that King said that “The operations of both CLICO and British American Insurance Company are deemed insolvent and require immediate corrective action.”

 

The Prime Minister is also reported to have said that “Clico was currently unable to pay all of its debts,” and that “measures were being put in place both at the national and regional levels to deal with the fall out.”

 

He is also reported to have said that “while a regional approach to the problem was being pursued by the Eastern Caribbean Central Bank,” his government “was focusing on ensuring that the interests of St. Lucians who have a stake in the companies are being protected.”

 

Prime Minister King indicated that as part of that protection his government had “taken steps to secure all the registered assets of Clico in St. Lucia.”  This statement of course comes in the wake of other measures taken to protect the policy holders in other Caribbean jurisdictions.

 

We recall for example the February 22^nd Central Bank of Trinidad and Tobago application for an injunction to restrain C L Financial or any of its subsidiaries or related companies from in anyway disposing of any of its assets wheresoever those assets are located and however they are described.

 

We also recall the 25^th of February application by the Commissioner of Insurance of Guyana for the High Court in that country to issue an order to place Clico Guyana under the Judicial Management of the Commissioner of Insurance.

 

Indeed, steps were also taken in the Bahamas in respect of Clico Bahamas which is now being wound up on the grounds of insolvency under the supervision of the High Court.

 

Despite all of these signals our own Prime Minster has stubbornly refused to take any action that will protect the almost 40,000 policy holders depositors and their families here in Barbados.

 

Neither has he commented on the very worrisome observations made by his colleague Prime Minister in St. Lucia about the State of these two Companies which have significant interests here in Barbados.

 

In stating that “the operations of both Clico and British American Insurance are deemed insolvent” Prime Minister King was pointing directly at us because the St. Lucian business interests of Clico fall under the operations of Clico Holdings Barbados.

 

What then is the situation with respect to Barbadian Investors and policy holders with British American insurance? When will our Prime Minister declare what steps he is prepared to take to protect Barbadian policy holders and investors?

 

In the face of the clear and present volatility in the regional and international financial market, how can we feel satisfied that our Prime Minister is being faithful to our taxpayers first and above all others?