OPPOSED TO BORROWING ON THE JAPANESE MARKET
Tuesday, January 19th, 2010DENIS KELLMAN’S COLUMN- THE DEBATE
OCTOBER 6, 2006
In the early nineties, the economy of Barbados continued to show signs of contraction even though the year 1989 showed recorded growth. This was not the first time this type of behavior was evident in our economy. One would recall that the late Harold Blackman made this observation about our economy as far back as the early eighties. This occurred when the economy performed well in 1980 and by 1981 under the late Tom Adams, it was before the IMF.
For the first time in our political history, we saw massive layoffs and serious restraints, which were worst than any period before, even the oil crisis in 1973. Some commentators would want us to believe that the first crisis which we found ourselves in was the nineties and that everything that occurred in that period was as a result of decisions made during that period.
What had to be dealt with was a combination of previous events, the most notable one was when we borrowed on the Japanese market when the Yen was .008 to our dollar and had to be repaid at over .016. to the average man, that meant nothing, but those of us who had to deal with the problem understood the severity of this particular problem.
Fortunate for me, even though I was not part of the negotiations between the Government, CGB and BSIL, I was part of the pain to execute the repayments. I remembered well that we repaid half of the original loan and still owed the full loan. This occurred with the knowledge of the officials of the CDB. The officials understood the effect of floating currencies and were unfortunate to have had a Japanese loan at that time and were fortunate to find a borrower who was willing to borrow in US dollars and repay half in Japanese Yens. This saved the CDB from having to service the loan, because they were able to download it on the sugar industry.
The Government ably led by the Late Tom Adams learnt nothing from the sugar industry’s experience and went ahead and arranged to borrow three loans on the Japanese Market. These loans were opposed by the Late Errol Barrow and myself. Such loans were so bitterly opposed by us that the late Errol Barrow went so far as to disassociate himself from his Governor of the Central Bank and his Minister of Finance.
These three Japanese loans saw Barbados giving a rich country, Japan about $200m in principal and interest above the norm. in accounting terms, we would have said that foreign exchange losses. I must admit that too many people have not experienced this, therefore it would not sound logical. Those persons who dealt with the audit of the sugar industry would understand this particular reference.
Compounded with this problem was the introduction of the unemployment benefit which was a good suggestion by the Union, but badly implemented by the Government. This saw the workers of Barbados being encouraged to go home for 26 weeks to watch “Soap Operas”, instead of having a choice to receive a discounted lump sum payment and being encouraged to return to the production line.
As I write, 25 years has elapsed and nothing has been done to correct this problem, but politicians who have created this social problem are now behaving as if the productive capacities have deteriorated by accident. Up to the eighties, Barbadians understood the meaning of working for their needs. This Government that understood the importance of the dependency syndrome included values in Barbadians which were not there before, thereby preventing them from being independent. This was not an accident and one could well understand why social transformation was not a policy, but a Ministry paying out largesse.
Twelve years after winning Government in 1994, Barbados finds itself back in the same situation and instead of the A Government being able to show the results of growth, it now finds itself having to use the labour movement. The labour movement is now saying that the DLP should accept the glory for the protocols. This is occurring at a time when the Government has admitted that even though the DLP laid a good foundation for earning foreign exchange, it has not occurred. The workers of Barbados have now spoken in the polls and have indicated that while some of their representatives were ignoring the warnings from the writer, the cost of living was skyrocketing. These workers have seen profits of the Private Sector and the revenues Government doubling while at the same time, the workers were under wage restraint and high cost of living.
The Prices and Incomes Protocols have failed the workers. Those of us who felt that the foreign reserves would have increased are now hurting to see that we are now selling Fixed Assets to pay Church Account Bills. We are willing to continue helping the unions to get the just due for their workers, but they must understand that our charge was started by Duncan O’Neale in the 1920s.
Our first remit will be to see Barbados productive again, with the emphasis on labour and capital. Consumption will be the enemy, not Capital not Labour. Foreign reserves will be our remit, not revenue.
We have always corrected the problems left for us. We did it in the sixties and the eighties and we now stand ready to correct the problem in 2006.
Peace, love, unity, humility, honesty, frankness, wisdom and understanding.
