Tag Archives: Barbados Economy

The other Barbados

Barbados Barrels CharityIt’s not all Platinum Coast, you know.

There are more than a few folks I know looking forward to barrels from friends and family abroad.

(Is is Christmas yet? No? Send them anyways!)

Things are going to get very very bad this year and next.

Hey you lot over there… please send some barrels.

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Filed under Barbados, Economy

Patrick Hoyos: Side effects from the drug of borrowing money

Estwick Gun

Barbados Minister of Agriculture David Estwick should stick to doctoring crops

I like to watch those drug ads on American TV in which the part at the end that starts with “Do not take such-and-such if you are, etc…” takes longer to recite than the part telling you about the benefits of the product at the beginning.

During this part of the ad you are warned of imminent serious side effects or even death from taking said drug if you happen to have any one of perhaps a dozen other ailments besides the one it is supposed to treat. But at the same time there are scenes of the happy patient enjoying a sunny life with his or her family, obviously not having any of the grim preconditions being read out as fast as possible by an anonymous voice.

I was reminded of these ads when reading the presentation to the Cabinet by Minister of Agriculture Dr. David Estwick, the text of which was published recently in the NATION.

The symptoms were outlined: Patient Barbados broke, mired in debt, can’t pay bills. Diagnosis: It needs a lot of money fast.  Prescription: Swallow US$3 billion from the United Arab Emirates and wake up feeling a whole lot better in the morning.

… read the full Broad Street Journal article by Patrick Hoyos: Take three billion and call me in the morning

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Definition of Irony: Fat Sandals Resort Chairman Butch Stewart chides Barbados hoteliers to complain about overtaxed tourism sector!

Sandals Butch Stewart

Butch wins! Disproving “Too much weight on a race horse, it can’t win.”

Nice work if you can get it: Stewart chides other Barbados hoteliers for not getting the same tax concessions as Sandals…

Sandals’ Chairman Butch Stewart says…

The fact is if you put too much weight on a race horse, it can’t win. When you burden an industry by overtaxing, you cannot do enough business. The real fallout is not so much the fact that you are not doing business is the condition of the properties because there is not enough money between the competitive rates today, paying taxes and at the same time being able to improve, expand and modernise the hotel.”

Noting that cruise ships are able to avoid the same tax levels as land-bound tourism providers, he nonetheless stated, “The cruise ships are a vital part of the tourism industry; it is not the cruise ship that is at fault. The growth of the cruise sector has to do with not having to pay taxes – taxes and exports don’t mix.”

In terms of concession, the hotelier highlighted, “Our criteria is transparency, so everyone knew we got concessions. In Grenada we spent [money] developing and building a hotel that we would not have been able to do if we were not able to look at the long-term 25 years of concessions and spend money based on long-term thoughts. We plan to do much the same here in Barbados because as we have a long-term view.

“The same way a company negotiates with government and gets concessions I believe that the business community, if you believe as strongly as I believe, that anything to do with export taxation impacts business, you have a responsibility to do [or] say something about it.”

Adrian Loveridge says…

Put it in simple terms. For my hotel to buy a 750ml bottle of Johnnie Walker Scotch would cost me sixty US dollars. Sandals are able to pay ten dollars.

“Unilateral concessions to Sandals immediately destabilized the other 120 hotels on the islands, not to mention the condos, villas, apartments and guest houses. Completely destabilized the industry.”

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Filed under Barbados, Barbados Tourism

Hey Buddy, can you spare Barbados a dime?

How is it possible that we are here? Begging the EU, begging China, begging anyone to help us keep the lights on and the water flowing?

Leadership – that’s what got us into this mess, and the same leadership says it can take us out of the mess: but only if we beg and borrow…

BRIDGETOWN—The European Union says it is willing to provide Bds$100 million to Barbados in grant funding. A statement issued following talks between Barbados and EU delegations, noted that the funds would become available once certain macro-economic and public finance criteria were fully met. It said Bds$65 million could become available to Barbados this year. The European Union last year released Bds$28 million for the Barbados Human Resource Development Programme, while another Bds$15 million was provided through the Barbados Renewable Energy Programme, all in the form of non-reimbursable grants. The EU delegation was led by Ambassador Mikael Barfod, while Finance and Economic Affairs Minister Chris Sinckler led the Barbados team. “The EU would like you to know that it could assist Barbados in leaving the present crisis behind,” Barfod told Sinckler.

Guardian Media

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Filed under Barbados, Business & Banking, Disaster, Economy

Can MP’s leave their egos at home?

Journalist Ian Bourne

Journalist Ian Bourne

Like my old pal from Pull-Push, I also am not an Economist, but instead I wish to provide someways and means I have been mulling in the hopes Barbados would flourish once again, if they are used or adapted then at least progress is made – everyone is operating too close to the chest, as they seem to want to be the sole savior, Barbados needs to open up and thus advance in making the way forward as clear as possible!

DISAPPOINTMENT: BLP FAILS ALSO!

It is sad that David Estwick changed his mind so drastically from Saturday at 2 p.m. We may never learn what fair means or foul were used to achieve the base result which leaves more bitterness in many Bajans’ mouths already soured by the gall of hardships that continue to appear so odd when compared with the rest of the world, which appears to be mending at a steady pace…

The chance for either side of Barbadian politics to redeem itself saw the Grinch winning late last year when Mia Mottley failed to cut her own salary on Black Friday when the loss of 3,000 in the public sector was foreshadowed. She could have chosen to emulate, and even create a Bajan precedent, by doing like Nevis, Bermuda & St Vincent when their new leaders chose wage slashing as their first act in Office. Vance Amory chose to give his fellow Nevisians a savings of EC $70,000 a year for the next five years off of his salary; while Craig Cannonier in Bermuda did like Ralph Gonsalves in St Vincent – 10% for himself and 5% for the rest of Cabinet.

… continue reading this article at The Bajan Reporter

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Filed under Barbados, Economy, Politics

Family loses 3 jobs – exposes nepotism, cronyism at National Housing Corporation?

Barbados Jobs

But then I started to think “How can it be that a couple and their adult son are all hired into juicy NHC jobs all within the same time period 5 or 6 years ago?”

Barbados government lay-offs start to hurt

by passin thru

A little human interest piece in The Nation initially invoked my sympathy where three family members in the same household lost their jobs at NHC on the same day.

The house income instantly went from $7,000 a month to nothing. We can feel for these folks. $7,000 a month sounds like a lot of money, but in a house with three adults and two other children, there is not much left over once everyone is fed, clothed, sheltered and transported to work and schools.

“I don’t have a job. I owe the credit union. I owe the bank. I owe for the stuff in here and I have my son to support. What am I going to do?” said the woman, and I do feel sorry for her.

But then I read further and started to think “How can it be that a couple and their adult son are all hired into juicy NHC jobs all within the same time period 5 or 6 years ago?”

It could be luck, I suppose, that they all applied for NHC jobs and each was hired. Could be, I suppose.

But I know my Barbados too well. I know how things work around here.

This layoff of an entire family should be news and discussion for more reason than they are on the breadline.

There is another story here, and I don’t think that the island news media will cover it or ask the right questions.

Something to think about!

Read The Nation article here, but we have to print it all because you just know how that paper changes history!

Family Loses Jobs

ON FRIDAY MORNING, Hallam Gittens, his girlfriend Andria Brathwaite and stepson Kishmar Brathwaite were sitting on a monthly income of about $7 000 amongst them.

That sum was stripped down to zero in a matter of hours, through no fault of their own.  Continue reading

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Filed under Barbados, Disaster, Economy

Bloggers can make a difference – Sandals now serving Bajan rum… but value delivery eludes our tourism industry

“Value-for-money is probably the most discussed subject amongst our cherished guests. Many simply cannot understand why a piece of locally available fish cannot be cooked, garnished and served in moderate surroundings for around BDS$25-30.”

Killing the messenger – or listening!

Adrian Loveridge, tourism expert

Adrian Loveridge, tourism expert

The blogs can of course be a double edged sword. The anonymity allows, if the contributor wishes, comments to be made without risk of targeted personal attacks and political labeling, while still being able to express an opinion whether constructive or not.

Sadly, if you chose not to hide behind the veil of ‘anonymous’ it holds the risk of the messenger being castigated, rather than evaluating any merit in the message itself.

For those of us who hold democracy dear and have personally experienced alternative regimes, it goes with the territory and if it helps maintain responsible freedom of speech then personally I have no problem.

A recent blogger, writing under the name of ‘Fisheye’ put forward 16 points to improve our tourism offerings.

Online Immigration Forms… Why not?

To me, one suggestion especially stood out and that was to allow our visitors to complete the required immigration form online.

Bearing in mind the rapid trend in online transactions, whether for banking, bill payment, shopping, airline or hotel check-in, car rental registration or whatever, it seems a very simple but effective way to capture important marketing information.

It may also speed up the collection of this information to allow the Barbados Statistical Service (BSS) to make it publicly available in a timelier manner. It can often take the BSS ages to post arrival information on their website and even then, months like August 2013 are not available at all.

Compounding the difficulty in accessing up-to-date information is the fact that the Ministry of Tourism does not currently have a functioning website.

Other ‘Fisheye’ suggestions included the issuing of local driver’s licenses at the Barbados Tourism Authority’s (BTA) airport office and ensuring widespread availability of lower priced SIM cards to save our visitors from expensive roaming charges. Continue reading

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Filed under Barbados, Barbados Tourism

Ralph Taylor explains the Barbados tourism disaster

I’m about half way through this video of SoCo Hotel owner Ralph Taylor talking to a BLP meeting last Sunday the 12th of January 2014.

Mr. Taylor tells it like it is, but so far his analysis is missing two factors:

1/ There’s no money left after 20 years of BLP and DLP larceny, neglect and stupidity.

2/ Investors aren’t staying away in droves just because of the numbers: they know that Barbados governments have burned many foreign investors through broken promises and non-payment.

Nonetheless, it’s worth listening to Mr. Taylor, who starts in with how bad things have been in Barbados in terms of declining hotel rooms (and thus declining investment) for the last 34 years…

Number of Hotel Rooms 1980 and 2014

Country      1980        2014      Average Growth Hotel Rooms

Jamaica        10,000    30,000    486% for Jamaica, Cuba, St. Lucia

Cuba              7,226       57,000

St. Lucia        1,245       4,900

Barbados       6,680     5,400      -20%

“We are still not getting new hotel development. We must ask ourselves, why are we not getting this new development?

The reality is that investors are looking firstly for adequate returns on capital, and then all other factors are considered.

When there was a big hue and cry over the concessions to Sandals, my contribution to that debate is that I have long advocated that tourism is an export industry, and therefore its input costs must be free of duty.  Continue reading

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Filed under Barbados, Barbados Tourism, Economy

Bahamas blasts Barbados in Battle of the Bonds

Barbados_Flag125.jpg

How the world received two different bond offers…

Barbados forced to withdraw bond offer

“Cash-strapped Barbados’ efforts to raise urgently needed money on the international markets have suffered a major setback with its withdrawal of a bond tender offer and buyback for up to US$250 million (BDS$500 million).”

October 4, 2013 Govt move to raise money hits a snag

Bahamas bond offer over-subscribed by factor of 20!

The Bahamas has received “a huge vote of confidence” after the Government’s $300 million foreign currency bond issue was 20 times’ oversubscribed, with investors accepting an interest rate almost one percentage point lower than anticipated.

James Smith, the former minister who is now a key Ministry of Finance adviser, yesterday confirmed to Tribune Business that the $300 million sovereign issue had received “a fairly robust response” from the international capital markets.

“I think they were closing the offering some time yesterday [Monday] afternoon,” Mr Smith said, revealing that it had attracted subscriptions worth $5-$6 billion – more than 20 times’ the amount sought.

January 15, 2014 Gov’ts $300m Bond Issue Oversubcribed ’20 Times’

“The ultimate piece of bad news for ordinary Bajans, as they call themselves, is that their Social Security fund has essentially invested about 80 percent of its assets in Barbadian public debt, which is now almost worthless. And so, you know, we’re looking at a major social catastrophe in paradise here…”

December 7, 2013 – James S. Henry: Barbados debt crisis and the “offshore haven” industry

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Peter Boos lays out the disaster of our Barbados economy. Uses the ‘unrest’ word.

  sinking ship barbados flag DLP

Barbados is Sinking

There is no room for hubris, arrogance, false pride and ignorance …

“Government’s chronic crises of excessive debt, high fiscal deficits, falling foreign exchange reserves and overstaffed and outdated institutions for delivering public services are only a part of the deeper problem.”

by Peter N. Boos FCA

Recent events and public pronouncements both locally and internationally have confirmed the very poor state of the Barbados Economy.

Government’s chronic crises of excessive debt, high fiscal deficits, falling foreign exchange reserves and overstaffed and outdated institutions for delivering public services are only a part of the deeper problem.

This is not a crisis like any we have ever experienced and it requires a response like nothing we have done before.

Waiting for recovery is not an option. Many countries already have strong growing economies. In Barbados all of our productive sectors are under-performing.

Barbados is in a deep structural vortex and it will take great leadership, courage, new thinking and teamwork to dig us out a step at a time and build a strong sustainable economy.

This crisis has been in the making for many years.

Whilst spending less is critical, our fiscal and monetary deficits are symptomatic of the many underlying weaknesses that retard growth and investment.

Our limited export sectors, our outdated education system, the dysfunctional Legal Justice System, our poor labour productivity, pitiful business facilitation, lack of private sector innovation, absence of good leadership and management skills are all areas needing significant improvement.

“Cutting costs by laying off people will not fix the problems and create a competitive economy. It could in fact do the opposite if the result is social unrest.”

Increasing taxes will create further corruption, unemployment, business failures, mortgage defaults and bankruptcies.

For those same reasons a devaluation will cause pain with little gain and will deliver a severe blow to our ‘national brand’.

The Barbados reputation for conservative, prudent, financial management has been decimated. Lost reputations are difficult to recover. Continue reading

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How much crime until it is called “Civil Unrest” ???

U.S. Marine trains Barbados Defence Force in crowd control, June 2012.

U.S. Marine trains Barbados Defence Force personnel in tactics, clubs and shields for crowd control, June 2012.

Upsurge in crime and drugs feared – due to increased unemployment

Step #1: Government makes 3,000 workers redundant.

Step #2: Increased recruitment efforts for Barbados Defence Force.

Step #3: Politicians and police meet “to deal with any problems that may creep up… with unemployment due to increase as a result of public sector retrenchment.”

“We have to find ways to reach across the political divide,” the attorney general said.

… from the Barbados Today article Attorney general to meet with police top brass

Wuhloss! It sure sounds like somebody is getting a little nervous. Continue reading

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Filed under Barbados, Crime & Law, Economy, Police

Barbados Hotels and Resorts debacle continues with another government loan guarantee. Where did all the public money go?

barbados-gems-hotel-scandal.jpgGEMS scandal keeps going and going and going…

Say ‘goodbye’ to your tax dollars as government guarantees a loan with zero hope of repayment.

Adrian Loveridge, small hotel owner.

Adrian Loveridge, small hotel owner.

Whatever was behind any honest intentions of the Hotels and Resorts Limited (HRL) or the “GEMS” debacle, it is difficult to imagine a worse outcome so far.

Government’s decision to guarantee yet another loan to this failed entity, despite the current austerity situation, frankly defies belief and clearly will not have a happy ending.

This latest loan is for BDS$5.55 million at an interest rate of 7.75 per cent, arrangement fee of $350,000 and monthly repayments of $55,000.

Included is a $300,000 overdraft facility which attracts an administration charge of $5,000 each month.

HRL now operate a single hotel – Blue Horizon with just 67 rooms. Another 50 additional rooms acquired at the time of purchase (1997) remain derelict all these years later. Savannah and Time Out at the Gap are leased and operated by private sector interests.

Where did the money go?

Three other properties originally in the GEMS portfolio were sold and it still remains unclear what price they realised and exactly where those funds went. Continue reading

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Filed under Barbados, Barbados Tourism, Economy, Freedom Of Information

Happy New Year 2014: Forbes announces that Barbados is on its knees, in a financial meltdown.

Barbados Finance Minister Sinckler

“Barbados has credit rating equal to Gabon and Nigeria.”

“That is very bad news for 126,000 long-time contributors to Barbados’ National Insurance Fund…

At least 60 percent of the Barbados National Insurance Fund’s $2 billion is invested in this dodgy Bajan junk – it now finances a third of Barbados’ entire public debt.”

There’s not much more to say when the truth slaps you hard in the face – in this case delivered by one of the most respected financial publications: Forbes.

You see that photo above of Finance Minister Christ Sinckler, “the Grinchler who soiled Christmas” ???

Forbes printed that. Wuhloss!

It looks like BLP Member of Parliament Dr. William Duguid knew something when he pulled the ejection handles on Barbados, moved his family to Canada and his assets offshore. You can bet that Owen Arthur has his Swiss bank account number memorised too!

And although the DLP blames the BLP and the BLP blames the DLP, it really doesn’t matter anymore. This is where we are…

Postcard from Barbados — a.k.a. ‘Cyprus West’

Barbados, “the Jewel of the Caribbean,” the tiny easternmost island in the Lesser Antilles with 288,000 year-around inhabitants and lots of very rich foreign visitors and investors, is in the throes of a financial meltdown.

While its entire GDP is now only worth about $4.2 billion, and its population is smaller than that of Duluth Minnesota, this crisis is worth examining closely. For here we have a very precise example of the “finance curse,” where excessive dependence on high debt, an aggressive offshore haven industry, very low tax rates for high-net worth investors, foreign companies, and banks, and high tax rates for everyone else, have essentially brought this little country to its knees. Continue reading

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Filed under Barbados, Disaster, Economy, Offshore Investments

Moody’s downgrades Barbados: Does it really matter? We’re already ‘junk’ status!

 moodys Barbados credit rating

Is devaluation a now a given?

by West Side Davie

There comes a time during a bankruptcy when the debtor stops caring. The debtor realises that there is nothing more they can do and it’s all about the ride and having a place to sleep and a meal or two a day. I’ve been there myself, and although I don’t care to go into the personal details I can assure you that your skin gets thick and tough and very quickly you get a new attitude that allows you to survive and even thrive as your finances and everything you have crumbles. Mostly your woman leaves. No money, no honey!

With assets of $20,000 and debts of $100,000, it doesn’t really matter if the debts climb to $200,000 or $300,000…. I can’t pay it! You think, “Let it go sky high! Why should I care?”

Unless the debts were passed onto your children like the indentured slaves and sharecroppers of the past – or of the present in some countries.

Back to Bim… Barbados has a few more assets than I did, but the people in charge of the money are going to squeeze us for more interest. They do this by lowering the ratings. The lean years are here and our so-called leaders never put away a dollar during the times of plenty.

IN CONTRAST to the prevailing mood of confidence over the economic future of Trinidad and Tobago, there is spreading depression across in Barbados where thousands of public sector workers are facing retrenchment early next year as the government anxiously seeks to avoid a devaluation of the Barbados dollar.

Here in Trinidad and Tobago, while Prime Minister Kamla Persad-Bissessar was last week playing a “Santa Claus” role with her offer of a 20 per cent rebate over the past two days on a range of widely consumed basic commodities, the Guyana the government of President Donald Ramotar found much comfort in another consecutive year of  economic growth.

(snip)

Having concluded an arrangement with the IMF that included, for a start, the bitter medicine of some 3,000 job cuts in the public sector, or face the threat of devaluation of the Barbados dollar,  the Democratic Labour Party administration of Prime Minister Freundel Stuart has Barbadians in a mood of spreading gloom.

Accustomed to applause from international financial institutions and credit rating agencies as having the most stable currency in this region-50 cents to the US dollar-the prospect of having to cope with a devalued dollar is viewed by Barbadians as sacrilegious talk.

… from the Trinidad Express Spectre of devaluation

Bajans are well and truly screwed. And so are the next generations because we keep mortgaging the future for our children.

The answer from our leaders is never to stop borrowing and to make do. It never is that. Always the answer is to pay whatever is asked in interest and go to the money men.

Tell you what I’m going to do. I’m going to get a little squat, work hard and save. I’m not going to continue to borrow money. I’m going to reorganise my life, downsize, and work hard.

But I’m not going to borrow more money if that borrowing is on the heads of my children…

Another downgrade for Barbados

Moody’s Investors Service on has downgraded Barbados’ government bond rating to Ba3 from Ba1, putting the country’s rating deeper into junk territory.

It cited the country’s “continued anemic economic performance”; ongoing deterioration in the government’s financial strength, due to persistently large fiscal deficits and rising debt levels; the deterioration in the government’s debt profile as a result of the significant increase in domestic short-term borrowings over the past two years; and the fall in foreign exchange reserves by more than 30 percent during January-September to $505 million for its two-notch downgrade. Continue reading

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Class… discuss!

Barbados Economy

What will be the Return on Investment? When?

A UWI friend sent us the above photo cartoon, but to us it looks like a fight over an empty bucket.

If we had that kind of money, where should it be allocated?

And please… don’t use the word “invested”, because there’s no investment being talked about here.

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by | December 9, 2013 · 10:43 am

Economist and Investigative Journalist James S. Henry: Barbados debt crisis and the “offshore haven” industry

“The ultimate piece of bad news for ordinary Bajans, as they call themselves, is that their Social Security fund has essentially invested about 80 percent of its assets in Barbadian public debt, which is now almost worthless. And so, you know, we’re looking at a major social catastrophe in paradise here…”

So just last month, Barbados tried to raise $500 million of public debt in the U.S. market, and they had to withdraw the debt offer. And now they’re really looking at very serious IMF-type conditionality in order to get out of this situation. So, you know, the ordinary middle-class in Barbados is going to experience higher taxes in the form of excise and VAT taxes.

And meanwhile you have this very wealthy elite. I’m sitting in a hotel where the average room is $350 a night. Two doors down from this hotel is a room that–there’s a hotel the charges $4,000 a night up to $12,000 a night with a two-week minimum. You know, they have this just very split-level kind of society where the very wealthy people from all over the planet come to Barbados and enjoy the beaches and the beautiful natural environment, but you have regular Barbadians having to actually pay most of the cost of government through VAT taxes.

The ultimate piece of bad news for ordinary Bajans, as they call themselves, is that their Social Security fund has essentially invested about 80 percent of its assets in Barbadian public debt, which is now almost worthless. And so, you know, we’re looking at a major social catastrophe in paradise here, and, I think, an important thing for us to take a look at in the United States, not because Barbados is a major trading partner in the U.S., but because it is a foreshadowing of what can happen if we are going to be utterly unwilling to raise taxes on big companies and the wealthy in order to help tackle our debt crisis.

… from The Real News transcript of the above video.

James S. Henry is a leading economist, attorney and investigative journalist who has written extensively about global issues. James served as Chief Economist at the international consultancy firm McKinsey & Co and as an investigative journalist his work has appeared in numerous publications like Forbes, The Nation, and the The New York Times. He was the lead researcher of the recently released report titled ‘The Price of Offshore Revisited.’

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Filed under Barbados, Barbados Tourism, Economy, Offshore Investments

Barbados Goverment defaults on payments to health clinic builder – Project shut down

Barbados Financial Collapse

(Photo courtesy of The Nation. Click photo for large)

“Serious cash flow problem in central Government”

One of the Democratic Labour Party Government’s prized capital works projects has come to a screeching halt.

Work on the long awaited St John Polyclinic and adjoining facility that is slated to bear the name of late Prime Minister and long-standing Member of Parliament for the parish, David Thompson, has been stopped due to a serious cash flow problem in central Government.

According to reliable sources, the project’s main contractor, ADC Building and Maintenance, was owed almost $3 million before the red light was put up by Government.

… read the full article at The Nation: Work Stops!

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Lessons for Barbados from the Roma Cafe, Detroit

“You can never get comfortable with something you’ve done, even though you’ve done it for so many years.”

“The city implemented an ‘awning tax’. They taxed us for having an awning over the city sidewalk.”

“When there are jobs, crime low. When there are no jobs, crime high.”

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