“Dog bite it! Wild Coot, on April’s fool day this year, you wrote an article headed ‘Balls Of Fire’ in which you told people about what the government in Cyprus did to people’s savings. Were you suggesting that we follow suit?”
In present circumstances it would be a consideration. Although I did not get an award this year, maybe I would get one now. A haircut is due for consideration as an apotropaic (appeasement) to the International Monetary Fund. Indeed, what is provoking this consideration is the unused $8 billion or so lying in the commercial banks which the banks and Barbadians are reluctant to use in order to help the country and give our minister a “blai”.
You see where the Central Bank is now making a move to issue the 72nd issue of Government of Barbados Savings Bonds at 5.5 per cent interest? Well, the banks can make more money on mortgages, nine per cent, on cars (25 per cent), on credit cards (28 per cent; they’ve stopped issuing travellers cheques) and on Christmas loans (25 per cent). Therefore, banks are, as I have said, playing a dangerous game. They will not make savings bonds their first option in view of the interest offered and the long-term aspect.
So in order to counter the threat from the Wild Coot as minister of finance, Bajans should use their copious savings to support the Central Bank. This would mean less money at the disposal of the banks. People have the money in the banks anyway, earning at the most four per cent, even two per cent, and they intend to keep it there following their risk-averse mentality. So why not help the country?
I do not agree with how the Government is using the money, but it could save us from going abroad and begging unsuccessfully.
If banks were to buy the bonds, the Central Bank would not have to print money by issuing Treasury Bills (foreign exchange gone); although, however you look at it, new money is still coming onto the market to be spent by Government in salaries.
It would assist the Government in its unwise policy of not shedding salary obligations, not honouring its debts, notching up more interest payments, endangering the National Insurance Fund and imposing excessive growth-stunting taxation on an already overburdened people, not to mention giving away the family silver in concessions. The lesser of two evils!
If the general public does not buy the savings bonds, then the Wild Coot, as minister of finance, will proceed with his cut. Those people and institutions with $30 000 or less in savings will be exempt from the cuts, but the others will have to pay up.
“So Wild Coot, what would you have achieved in making these infamous cuts? Your government would still be spending the money and threatening foreign exchange exodus.”
Well, judging from past experience – and I got it from the horse’s mouth – we were forced to sell our National Bank to the Trinis because Bajans would not buy the shares. The government, with my action, would be free of the $700 million or more debt, free for the time being of paying all that interest, able to look better at its hiring policy and its response to the prospective sale of assets, not to mention its propensity to give away these hills and fields that we are supposed to call our very own.
“But Wild Coot, would you not be frighten to tackle the people’s savings in this way? Wouldn’t you be courting President Kennedy’s fate from some angry savers?”
Well, President Kennedy said: “Ask not what your country can do for you; but what you can do for your country”. Bless him in his grave! You see, even after 50 years, you cannot forget his legacy.
The only strategy in this bombardment of spending is to cut expenditure. Issuing savings bonds will scotch the snake, not kill it.
Harry Russell is a banker.
