Ince: Debt reason BLP sold BNB
GOVERNMENT SENATOR Jepter Ince disputes the Owen Arthur administration’s stated reason for selling the Barbados National Bank (BNB) 11 years ago as a response to low foreign reserves citing instead a debt problem.
Ince, Parliamentary Secretary in the Ministry of Economic Affairs, was speaking on Monday in the Senate during debate on the 2014 Appropriation Bill, of which the Estimates – approved last Friday by the House of Assembly – is the Schedule.
He insisted that the sale of the then state-owned bank had nothing to do with the foreign reserves or that the shares would fetch the highest price, “but because of the debt that was owed”.
He insisted that in 2003, the Barbados Labour Party sold 57 per cent of the BNB shares to Republic Bank of Trinidad and Tobago, giving it a controlling interest.
“They said it was the result of low foreign reserves and that they needed the foreign exchange,” he recalled.
But Ince pointed out that the foreign reserves in 2003 increased by $374.3 million.
The economy recovered from the difficulties in 2002, he said, strengthened in 2003 with gross domestic product (GDP) expanding by 2.2 per cent mainly due to tourism.
“And you are going to say to the public that is why you sold the BNB because you needed the foreign exchange and the economy was in trouble?
“Total Government revenue grew by 7.7 per cent. There was a deficit at the time of $165.4 million. How did they finance the deficit? $45.7 million out of National Insurance and [they] borrowed on the international market $63.9 million.”
He said when that amount was converted by 2.0388, “you will get approximately $132 million and then you add that to $45.7 and you would see that it outstrips the deficit”.
“So when you sold the BNB shares for $189 million, your economy grew by 7.7 per cent, and your foreign reserves increased by $374 million as a result of Government revenues.
“The reason why they sold it was because of the debt; you know, creative accounting, the monies that were borrowed by letters of comfort. They borrowed from the BNB. They had the National Insurance Scheme (NIS)
at their disposal and the BNB at their disposal; at that time, they controlled
57 per cent. They were indebted to BNB in 2002 by $385.03 million;
by 2003, that indebtedness went to $413.3 million
and they borrowed additional loans.”
He said once the letters of comfort expired, the Government had to go
to Parliament to seek guarantees and Barbadians would then have been made aware
of all of that debt with the BNB and that was the reason the bank was sold.
“I tell them to challenge me on that,” Ince declared.
The 2014 Estimates,
he added, was not about destabilising the economy but about protecting the economic resources.
He said the Appropriation Bill identified what were the challenges facing the economy – a persistent, hostile, speculative global environment in which the island functioned – and contained what the Government intended
to do to make sure the country remained economically viable. (AB)