(NATION NEWS) – Faced with $1.6 billion in arrears accumulated over the last five years, Government is assembling a “dedicated task force” to help solve the problem.
The Mia Mottley administration says the full extent of the amount owed, which includes $500 million in tax refunds owed by the Barbados Revenue Authority (BRA), “is still being assessed”, and it is planning to discuss solutions with the International Monetary Fund (IMF) mission due here on Monday.
“The Government is setting up a dedicated task force to assess the legitimacy of each claim, and to facilitate the ‘offsetting’ of any internal arrears. The approach to arrears clearance will form part of the discussions with the IMF,” Government said in a June 19 “creditor update”.
Large sums owed
In addition to the large sum owed by the BRA, the arrears accumulated up to the end of last month (based on latest available data) were $200 million in other arrears to the private sector; $400 million in contribution arrears to the National Insurance Scheme; $300 million in arrears to public corporations; and $200 million in arrears from public corporations to the BRA.
The serious nature of the debt arrears problem was highlighted by Prime Minister Mottley when she presented the Mini-Budget on June 11.
“I pledge that we will stop the accumulation of arrears. We must make all efforts to remain current in our payments and we must reflect the true cost of Government,” she said.
“We must not, as the previous Government did, present to Parliament false figures that fail to reflect our total liability for goods and services. We shall negotiate and settle legitimate arrears.”
Government also told creditors that, with negotiations for a lending arrangement scheduled to start with the IMF next week, any debt restructuring programme would be related to “an agreed macro framework and a set of medium-term macro projections” coming out of these discussions.
“The Government will be in a position to determine its forecast payment capacity over the medium to long term. It will be on this basis that the Government and its advisors will engage creditors to discuss repayment terms that are compatible with this projected payment capacity,” it said.
Government also said its planned restructuring would include treasury bill, treasury notes, debentures, Eurobonds, commercial bank loans, facility lease arrangements, and officially supported export credits.
These were obligations of Central Government, public corporations, and statutory corporations, “irrespective of currency, and irrespective of whether or not these benefit from Central Government guarantees”.
Government also told creditors that “for the purposes of determining its payment capacity going forward” it considered public indebtedness to comprise five components:
• All debt contracted by the Central Government, irrespective of currency denomination.
• All debt contracted by the public corporations and statutory bodies with a guarantee from the Central Government, irrespective of currency denomination.
• All debt contracted by the public corporations and statutory bodies without a guarantee from the Central Government, irrespective of currency denomination.
• Debt contracted by the Central Bank of Barbados.
• Net arrears of the Central Government and the broader public sector.