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Govt, listen to reason

Sanka Price

Govt, listen to reason

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PEOPLE WHO HAVE an investment in something and want to protect their interest usually go all out to ensure its longevity.
Whether the investment is emotional, like a relationship, a competition, business venture or just to save their jobs, people often go to great lengths to preserve what they have.
The move by the Almond Resorts staff to seek to buy out the financially troubled three-property hotel chain to prevent its collapse is a case in point. It would seem most of the 1 000-plus staffers were keen to pursue the buyout proposal put forward by their chief executive officer, Ralph Taylor. This would have involved giving up a portion of their salary as an investment.
In other words, it’s in their interest to take home less pay but retain their jobs, or do nothing and lose everything.
That Sir Roy Trotman, general secretary of the Barbados Workers’ Union (BWU), swiftly came out in support of the move saying the union would help to facilitate the workers, also shows the ‘interest factor’ at work. That is, it was best the union helped to save these people’s jobs to safeguard theirs and their family’s welfare as well as the union’s viability.
Yesterday’s decision to close the Almond Village property which would see the severance of 500-plus workers by Neal & Massy, the Trinidadian conglomerate that owns Almond, was therefore a severe blow to them and the Barbados economy.  
The most noteworthy insight to this development was given by Senator Geoffrey Cave, a longstanding director of Almond Resorts. As a proud Bajan and a successful businessman with major investments here and regionally, his concerns are particularly valuable as it is in his interest that Barbados and the average Barbadian always do well.
Speaking during the Senate’s debate on the Appropriation Bill 2012-2013, Cave said he realized that Almond’s problem was the debt it incurred due to the speed at which it expanded. He feared this high debt could have caused the chain to buckle if a hurricane struck. That hurricane, he stated, turned out to be the recession.
Moving onto the economy, Cave warned that the national debt was also too high, noting that Barbados had borrowed about $6 billion within the last six years as compared to about $4 billion over the other 40 years after Independence.
As if to emphasize his concern, the normally media shy Cave penned a Letter to the Editor in which here he outlined his fears. In that frank note, he suggested that Barbadians needed to realize that the painful experience going on in St Kitts and Nevis could happen here.
He said that country was experiencing a default on its government bonds that rivalled Greece in its severity for bondholders.
That is, investors including individuals, governments and pension schemes, face the prospect of only getting between $15 and $25 for each $100 of savings they had bought in these bonds.
The situation has occurred because the Dr Denzil Douglas-led government is unable to pay its debts and the International Monetary Fund (IMF) has stepped in to restructure the debt.
Cave said the lesson to be learned from Greece and St Kitts is that “countries which borrow excessively can and will go bankrupt, affecting the standard of living of everyday citizens for decades afterward”.
He said excessive borrowing by countries for “non-productive” projects inevitably comes home to roost when the debt burden levels become too great to bear.
The country often then has limited options from which to choose, and “these typically include massive currency devaluation, painful structural adjustment (layoffs and salary cuts) and/or debt default”.
Cave said: “Ten years ago, Barbados’ debt was rated ‘A’ by the key international debt rating agencies. Today, it is one notch above “junk”. In terms of debt-to-GDP ratio, Barbados is now the third-highest indebted country in the Caribbean, behind St Kitts and Jamaica – both of which are now in the hands of the IMF and have recently “restructured” their debt.
“In recent years, government deficits and inflation have both grown steadily in Barbados. Higher deficits necessitate increased borrowing. But the question we should ask ourselves each time a new bond is issued in our collective names: “What will the money be used for?”
“Borrowing and increasing a country’s total debt levels to pay current wages and salaries, especially for sustained periods and when the debt levels are already at alarming levels (greater than 100 per cent of GDP) is unfortunately not a recipe for lasting economic prosperity. I believe this is what we are doing in Barbados today.”
Cave’s critical concerns come six months after our usually quiet Barbados Private Sector Association (BPSA) lambasted Government for their high spending saying, essentially, that the economy was critically ill and in need of intensive care treatment.
That BPSA statement articulated the fears of the people who, through their investments and employment, keep this economy ticking over. They sense real danger and in the interest of self-preservation spoke out.
But is anyone in Government listening? Based on what we heard in the recent Estimates debate, it does not seem so.
• Sanka Price is the WEEKEND NATION and SATURDAY SUN editor. Email [email protected]