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Arthur issues savings bonds caution


SHAWN CUMBERBATCH, [email protected]

Arthur issues savings bonds caution

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BUYING SAVINGS BONDS at a time when Barbados’ credit rating is below investment grade could be “bad for your health”  and Government should tell Barbadians so.

Former Prime Minister Owen Arthur issued the warning last night during his contribution to the Budget debate.

Arthur, also a former long-standing Minister of Finance, said “on principle” he could not complain about the issuing of savings bonds since Barbados’ savings rates “are now among the lowest in the world”. But he said authorities, including the Central Bank, had a duty to caution investors “that the bonds that they are inviting you to buy have been regarded as not being of an investment grade”.

He also advised Minister of Finance Chris Sinckler that “if he is going to ask people to take up savings bonds, try to do as much as can be done to restore Barbados’ credit rating” – especially now when Government “has virtually run out of financing options”.

“It [Government] has virtually run out of financing options and if it is going to tell the ordinary man and woman that I represent in St Peter…‘stop putting your money in the banks, because of the dropping of the interest rates at the banks, and put them in savings bonds’, then it has a duty I think also [to say] that the bonds that they are inviting you to buy have been regarded as not being of an investment grade,” Arthur said.

“And that whenever the Central Bank comes on and tells people, as it is now doing, ‘come and buy these bonds’, I think it has a duty, like how the [United States] Surgeon General puts a thing out, [to advise] that these things can be dangerous to your health.”

In recent weeks Barbadians have snapped up $45 million in Government savings bonds, and a further $25 million issue opens today. The Central Bank has been heavily promoting the instruments, which are offering Barbadians 5.5 per cent tax free interest, compared to the one to two per cent minimum savings rates at commercial banks. (SC)

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