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THE HOYOS FILE: A few statements NOT made by Dukharan


Pat Hoyos, [email protected]

THE HOYOS FILE: A few statements NOT made by Dukharan

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“Every year we have this economist from Royal Bank . . . giving her outlook . . . (saying) Barbados is going to default in the next 12 months . . . and that Barbados should restructure its debt to achieve some particular results.”

– Chris Sinckler, Estimates in the House of Assembly last Monday, as reported in the DAILY NATION, Page 13, Tuesday, March 15

An increasingly embattled Minister of Finance has apparently decided to “duke” it out with RBC Group economist Marla Dukharan. He decided to draw a line in the sand and tell her employer, the Royal Bank of Canada, not to mess with the real boss of the Barbados economy.

“Don’t come ’round here talking rubbish,” he was further quoted as saying. He challenged the bank to put its money where its (economist’s) mouth was, and let him know which Government debt it was willing to ease Barbados on – you know, by extending the repayment time or lowering the interest rate.

Now, singling out a person for criticism is no big thing – all who comment on public affairs must be able to take it if they want to dish it. But Ms Dukharan did not predict either devaluation or default at the recent RBC Economic Outlook Seminar earlier this month. I know because I was there.

So here we have the minister of finance taking on the Royal Bank’s economist, and by extension, the bank itself, challenging it to unilaterally reduce its interest rates for the Government or . . . shut up its economist?

In doing so, Mr Sinckler was following the law of picking the low-hanging fruit, or perhaps suggesting somebody shoot the messenger. He was standing up for Barbados by warning Ms Dukharan: “Don’t come ‘bout here every year creating contempt and confusion in this economy . . . . Put up or shut up,” he was quoted as saying. (Ibid.)

Mr Sinckler’s warning to RBC would strike me as more courageous were he to treat other banks the same way. Was he not aware of what was said at the CFA dinner held in late February here? It is one thing to go to town on an economic analyst, who does not actually make lending decisions, and it is quite another to attack someone you may very well have to approach across the table behind closed doors to buy some of your government paper.

So you may play the tough guy with Marla Dukharan; but how about David Noel, Mr Sinckler? Don’t know him? Well, let me introduce you. Mr Noel is a Jamaican who is Scotiabank’s managing director, Caribbean East (which includes Barbados).

In his outlook for Barbados’ economy in 2016 at that recent FCA dinner, he forecast growth of 1.2 per cent for Barbados, but warned that growing public sector debt cast a shadow over this outlook. “We can’t get sustainable growth until we get this fixed,” he said.

Did you mention him in your recent tirade, sir? Did you tell Scotia to come in and advise you how much of Barbados’ debt or interest they were going to forgive?

Oh, and what about a Bajan banker named Donna Wellington, who is the managing director of CIBC FirstCaribbean’s Barbados operating company? Surely you must have made her acquaintance at one time or another.

At the same CFA dinner she said she agreed with Mr Noel’s assessment, and added that although official figures put the gross debt at 107 per cent of GDP, they did not include Government debt held by the National Insurance Scheme. She said: “If you were to include the NIS debt the gross debt would be 144 per cent of GDP.”

In her opinion, “reducing the Government’s deficit significantly will require some privatisation of public assets”.

Can someone please direct me to the Sinckler speech in which Ms Wellington was also placed on the receiving end of the minister of finance’s official scorn, and told not to come ’bout here talking rubbish?

I know Mr Sinckler has already held up RBC’s feet to the fire, but why didn’t he also mention Natalie Mansoor, an actual RBC banker as she is head of asset management at RBC Investment Management (Barbados) Ltd.?

At that same dinner, she said she expects to see downgrades, debt restructuring and defaults in emerging markets. “I expect devaluations. They are inevitable, whether we choose them or have them forced on us.” Barbados is an emerging market.

And what about the Irish economist David McWilliams, the keynote speaker at the RBC event for which only Ms Dukharan was pilloried? He said he understood clearly that Barbadians don’t want to devalue, and this position has become a central issue to the Barbadian psyche, but the result is that the country has to issue more and more debt.

Noting that our gross national debt had been put at 132 per cent by the International Monetary Fund, Mr McWilliams said Barbados would eventually have to do a major restructuring, in order to lower it. “The stronger Barbados dollar will eventually need to be rebalanced because if your balance sheet has too much debt, it will have to be reduced,” he said.

Are these bankers and economists just talking off the top of their heads? Well, if they are, so are Moody’s and the IMF.

In delivering its Government of Barbados credit opinion, on December 17, 2001, Moody’s Investor Service said: “High levels of short-term debt will continue to undermine the Government debt profile leading to increased refinancing risks; (and) continued Central Bank financing of the fiscal deficit may compromise the authorities’ ability to preserve the currency peg.”

And in its Press release of July 17, 2015, the IMF Executive Board said Barbados “faces daunting challenges, including external risks, high fiscal deficit and debt levels, and competitiveness challenges (and) they urged the authorities to implement a comprehensive reform programme that includes strong fiscal adjustment and structural reforms . . .”.

As far as I know, none of the above has been singled out for attack except Ms Dukharan. My guess is that they never will be, because even Mr Sinckler knows that you don’t bite the hand that feeds you.

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