THE HOYOS FILE: A looming fiscal tragedy of Grecian proportions
WHENEVER I ENVISAGE GREECE, lurching around in circles with a debt of 175 per cent of GDP on its shoulders, I see, not too far off on the horizon, little Barbados, walking with increasing shortness of breath with its own load of debt, now at 133 per cent of GDP.
In the Budget debate, Opposition Leader Mia Mottley called for a re-financing of the country’s debt in order to give us some fiscal breathing space.
Re-financing, if we could achieve it to a significant degree – remember, we have a debt of over $11 billion at present and rising by around a $1 billion every year – would certainly help us, as it would lower the amount we have to pay back every year, but for a far longer period.
Of course, it is just kicking the can debt down the road a few more years, so that not only our children and grandchildren will have to deal with it, but their offspring too, most likely.
But, I wonder, could we get some sort of massive roll – over of our national debt that would bring it down to manageable proportions? Would we not have to go to the International Monetary Fund (IMF), the World Bank and the Inter-American Development Bank for such a massive financial undertaking at rates we could afford.
Now, if that is the case, Greece is instructive.
I’m sure you know that Greece has been trying to do the same. Well, at least after the new government got over its high fever, induced by success at the polls, and stopped calling for Germany to repay Greece billions of dollars on account of how the Nazis had decimated the country back in World War II, and also for outright debt forgiveness to a large degree, because, well, they deserved it.
I am sure Greece does deserve a lot of plain and simple debt abolition, at least if you stood in the average Greek citizen’s shoes. But the country is not going to get it, it seems.
Tuesday, June 30 is going to be a big day for the country which civilised the Romans in a sort of, well, reverse takeover, and through Roman domination of the known world of hundreds of years, planted Greek philosophy, civil society, notions of democracy, and so on all over the place. It caught on in a lot of places and we are grateful.
But Tuesday is the day when, without an agreement with the “troika” of institutional lenders, including the IMF, the deadline will pass for the unlocking of billions of dollars in aid which it needs for its survival. It is also the day it has to pay back $1.7 billion euros to the IMF.
As you read this Sunday or Monday, they have either come up with a compromise deal which has eluded everyone up to Thursday, or they are still spending sleepless nights trying to.
If the unthinkable does happen, the European Central Bank will stop supporting Greece, and in a desperate effort to save foreign exchange the government may have to clamp down on what is left in the country through strict controls. A lot of money has already been pulled out of the system.
And what has, at this writing, been causing these Doomsday scenarios – including the possibility of a Greek exit from the European Union – is quite similar to what is happening here in Barbados: the refusal or inability of the government to cut spending enough to significantly reduce our massive current account deficits.
Minister of Finance Chris Sinckler once more threw a lot of words at the problem but they all boiled down to saying something like this: we know we have a problem, but it is not of our making. It is the fault of our Scandinavian welfare system and inefficiencies and wastage that comes when governments run t’ings.
Not to worry, we are setting up very serious focus groups to bring new streamlined practices to some of the statutory corporations. But we are not selling off anything. There will be no “privatisation picnic”.
Yes, that is the current phrase being used. As for the Opposition, if you ask it about privatisation, it will look at you with a blank stare, as if to enquire, “and what does the word mean in the English language? We have never heard it before.”
So far, I haven’t heard the Opposition refute being cast as privatisation picnickers by the minister of finance.
So instead of announcing a privatisation programme, Sinckler is giving us a Performance Monitoring Framework, a progeny of the Caribbean Regional Technical Assistance Centre, and the first entities it is to be tried out on are the National Housing Corporation, the Transport Board, the Barbados Agricultural Management Company, the Queen Elizabeth Hospital and the Bridgetown Port.
All of the things they will have to do I thought were things you did to run a business properly. This appears to be a new concept in government.
Perhaps because of the union problems it is facing right now, the Government has decided to go easy on streamlining its statutory corporations and boards. Remember, the Freundel Stuart administration has been talking about this for over two years now.
Meantime, I look at Greece and wonder: will Barbados be brought back from the brink as Sinckler is promising, or are we heading down the road to our own version of a fiscal tragedy of Grecian proportions?