Like an uncontrollable spend-thrift spouse, the Government of Barbados has been a shopaholic credit addict for years. And just like a spouse who cannot resist shop signs offering “No Money Down – No Payments Until Next Year!”, the Government is having to juggle the books more and more to conceal the truth from the rest of the family.
The Truth About The New “Foreign Reserves” Loan
The Government of Barbados is borrowing money to make payments on previous loans. That is the truth.
Oh… government says this latest US$65 million dollar international loan is to “strengthen foreign reserves”, but why are the foreign reserves so low? Where did the money go?
Think about that.
Barbados Is A Family – But Father Is Out Of Control With Chequebook In Hand
Think about your family finances – because despite all the smoke, mirrors and gobblety-gook talk of the spend-thrifts in government, managing a country’s finances isn’t much different than managing your family’s money. Yes, everything is on a larger scale, and “Father” has the ability to sign a loan that commits all family members to make payments forever, and to pledge all family assets against the loan – but in the end, it is only the scale of things and the power of the head of the family to tax all family members that is different from your family’s finances.
Foreign reserves are like the normal reserve in the family’s working account – maintained so we don’t hit a zero balance and to show the world that we have enough cash in the kitty to be credit-worthy.
But our reserve balance has been pillaged to make payments on all those previous loans that Father took out, and the bank is calling to warn that cheques will start to bounce unless we put a little more into the account.
A New Loan To Make Payments On Previous Loans
So what does Father do now? He commits the family to yet another loan on top of all the previous loans. That buys some time, but to keep up with the ever-increasing payments, the family members will have to work harder (more taxes). Father keeps borrowing and family members will have to continue making loan payments long after he retires.
Sometimes Father borrows to pay only the interest on the loans – so the family is paying interest on the interest on the interest…
If Father’s irresponsible behaviour continues, it is possible that sometime in the future, family members will even have to contribute what little savings they have (devalue the currency).
Mommy Helps To Deceive The Rest Of The Family
From The Nation News…
Griffith: Debt under control
GOVERNMENT is properly and effectively managing its debt situation.
That point was made clear yesterday by Minister of Agriculture Senator Erskine Griffith, during debate on a resolution to approve the borrowing of BDS$130 million on the international capital markets to strengthen Barbados’ foreign reserves.
Griffith told the Senate the loan was not to prop up the reserves since they were not in a state of collapse. He suggested that those who criticised Government for its borrowing regime, simply did not understand…
… continue the entire article at The Nation News (link here)
Father of First World Barbados, Prime Minister Owen Arthur
Mother of First World Barbados, Senate Leader Erskine Griffith
Photos courtesy of The Nation News. Fair trade for the link.