Dr. Marion Williams, Governor of the Barbados Central Bank , is telling stories for the children again. This time, she is advising the children "Don't Panic" over the high debt-to-GDP ratio.
Yup, we sure don't want any "panic" around the Barbados debt-to-GDP ratio…
Especially since Barbados artificially boosted the GDP in the first place by borrowing into the stratosphere. And even though we've faked the recent boosted GDP numbers, the debt-to-GDP ratio is still in outer space. (See BFP article "Barbados Central Bank Tells Happy Story For Naive Children")
Nope. We know that the profit from the Cricket World Cup 2007 will pay off the whole thing, no problem. Right, Dr. Williams?
Hello? Dr. Williams?
From the Nation News article "High Debt-to-GDP Ratio No Reason To Panic"…
AT LEAST THREE Caribbean central bank heads have expressed confidence that their countries' high debt to gross domestic product (GDP) ratio is manageable and not a sign to panic. This came from Barbados' Dr Marion Williams, Eastern Caribbean Central Bank governor Sir Dwight Venner, and Emsley Tromp, president of the Bank of the Netherlands Antilles, as they spoke on the first day of the sixth Euromoney/LatinFinance Caribbean Investment Forum.
Williams told the large audience…that Barbados' debt situation should not be placed in the same category with what was happening globally or within the region.
She said the current account deficit had reached the stage it was now at due to increasing competition within the banking sector – which led to credit expansion, a phased reduction in income tax rates, and the ongoing construction boom.
While noting this island's fiscal deficit was "higher than trend"…Williams said the contributing factors were "reversible" and she anticipated a "soft landing" in this economy's future.
Sir Dwight added that sometimes countries had to "bite the bullet" and borrow to develop areas that might not show returns right away, but would contribute to the gross domestic product (GDP) down the road. Williams agreed with this, saying "debt is not debt is not debt", and called for a distinction to be drawn between consumption debt and debt that was being used for productive purposes.