Debt not out of hand, says Mia

Barbados’ debt is not galloping out of control, declared Prime Minister Mia Amor Mottley.

This was the context on which she set the tone for the Financial Statement and Budgetary Proposals delivered in the House of Assembly on Monday.

Mottley said despite what was being purported by opposition voices, the country’s debt was still lower than when her administration first came to office in 2018. 

“The debt to GDP (gross domestic product) ratio is not precarious and this Barbados Labour Party Government has not increased the national debt to unmanageable levels. In fact, the national debt is now lower than it was when we came to office in 2018,” she said, evoking table-thumping from the Government’s bench. 

“When we came to office, the debt was 178.9 per cent of our GDP and at the end of February 2024 it was 114.6 per cent of GDP. In 2018, when we came to power, debt cost this country 68 cents of every dollar of revenue. Today we are now paying 30 cents of every dollar to service debt.”

The Prime Minister said this accomplishment was nothing short of exceptional, given the spate of natural disasters and exogenous shocks which impacted Barbados over the last six years. Among those mentioned were the COVID-19 pandemic, the La Soufriere eruption in St Vincent and the war in Ukraine, which continues to cause supply chain disruptions.

“The reduction in our national debt has been despite the fact that we went through the worst pandemic in 100 years; despite the extreme weather events, including the worst hurricane in 65 years. It also was despite the worst ash fall since 1902. Despite all the things that required citizens’ support, and against high expenditure, against shrinking Government revenues, our debt has been lower,” Mottley said. 

Comparing the management of the country’s debt to that of the previous Democratic Labour Party (DLP) administration, she charged that after the 2019 debt restructuring, her Government had only increased the national debt by $2 billion, a far cry from the more than $10 billion increase under the DLP.

“Let me put it into further context. In 1994 when the Barbados Labour Party became the Government, debt stood in this country at $2.5 billion. Fourteen years later when we left office, debt stood at $7.2 billion. 

“Under the Democratic Labour Party Government, not only did our debt mushroom under those ten years, not only did we record 23 downgrades, but we became the third-highest indebted country in the world. Therefore, this talk now about debt really amuses me,” she said.

“When the Dems left the office in 2018, the national debt, inclusive of arrears, stood at a whopping $18.1 billion from $7.2 billion where they inherited it. That is what they did; they took an economy from us in 2008 that was a $9.6 billion economy and gave us back an economy at $10 billion ten years later. So, when we say that the economy stagnated, these are the facts. 

“Given all the talk about debt, Barbados’ debt today stands in absolute numbers at $14.9 billion after we had carried it down $12.59 billion. In almost six years, we have only increased the debt of this country by $2 billion despite all the challenges,” she stressed.

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