From ghoulies and ghosties and long-legged beasties, and things that go bump in the night, good Lord deliver us. – Anonymous
I am minding my business, playing pan at the Croton Inn, trying to get the tourist dollars to come to the country when an old lady hailed me. “Wild Coot, I notice that both the Minister of Finance and the Central Bank Governor gone away at the same time. What you think of that?”
On investigating, I am advised that they are seeking money from foreign sources. To me that augured propitious or suspicious things and it puts me in the same position as when there is no cooking in the house and I have to resort to the refrigerator.
We, as a country, have been assured that our reserves are adequate, equal to almost 18 months of food and supplies. Our corporations are now potentially starved of bank interest and our banks unwilling to lend in a downturned climate. They are being constrained by inducement to lend to the Government. The National Insurance Fund “well” cannot take any more drafts. That is the present sorry scenario.
I have no problem with going abroad to borrow money. But, why are we going abroad to borrow at this time if our reserves are adequate? Is not the foreign atmosphere poisoned by our three downgrades and our junk bond image? Would not those factors militate against our ability to borrow, and if we could borrow, affect upward the rate of interest? Given these indisputable factors, why such a ‘bold’ move?
“No, Wild Coot, the US$350 million being borrowed is on top of the BDS$600 million, making BDS$1 300 million to form a giant stimulus. (Various dictionaries have described a stimulus as a cattle goad, a prick, a spur, an elicitation, a turn-on, something that excites an orgasm – good gracious, Barbados will be in for it). I feel that this would cause the population to grow rather than the economy.”
She continued: “Surely that cannot be true. We know that the medium-term plan has, as predicted, gone through the eddoes. We now need a short-term plan. But how does borrowing US$350 million from abroad in itself help the situation? Unless of course, the present foreign reserves situation is a figment of our befuddled imagination. Which perhaps is unthinkable?” (Leave)
I began to think of the Japanese situation. They tried to rekindle their economy by giving each citizen a bundle of money so as to get money-spending going. If we do that, the US$350 million could go a long way.
“Sumtin wong” as the saying goes. The Greeks used to say and are still saying, Quis custodiet ipsos custodes, which means that we need to repose full confidence in those who lead us. One day we have adequate reserves and the next we are off to borrow.
Now we are between the devil and the Constitution River and are turning to people who may be guided by the very advice given to us by the IMF and local luminaries. Remember what interest was charged to us by Trinidad recently even when rates were low. Just suppose that we do not succeed in our trek, what would that mean?
“Wild Coot, there would always be people willing to lend. You are a banker and you should know your people. It depends on how far backward the borrower is willing to bend in order to be satisfied or to satisfy.”
If the terms of any loan acquired in this low interest rate atmosphere are revealed, we shall see how desperate the situation really is and how much real money is in the kitty.
• Harry Russell is a banker.
