Central Bank paying attention to Barbados debt default - Ganga
Guyana’s central bank is aware of and paying attention to the possible implications of the Barbadian government defaulting on debt owed to local commercial bank, the Guyana Bank for Trade and Industry (GBTI).
Following the suspension of foreign debt servicing by the Barbadian Government, the state defaulted on payments for an unspecified sum owed to GBTI.
Bank of Guyana Governor Gobind Ganga in an invited comment on the issue told Stabroek News that “it’s a little haircut. It means we will have a longer period to have our investment returned, the bank will have to wait but it’s only a small haircut. Barbados has so far offered higher interest rates or longer payback period”
“We know they are in negotiations and for now we are just paying attention,” he added.
Last month Chairman of GBTI, Robin Stoby announced that its 2018 results were impacted by the default of the Government of Barbados which stopped payments on its external debt.
In his presentation which appeared in the bank’s 2018 annual report Stoby said “while both regulatory and internal guidelines limit our exposure to any one borrower the impact of the Barbados government default did have a negative impact on our bottom line”. The size of GBTI’s exposure was not stated.
He added that the “Bank is now part of an international group of investors who are negotiating with the Government of Barbados through the IMF and other international advisers to restructure the debt owed to us”.
On June 1, 2018 the Barbadian government chose to default on its domestic and external debts after finding only US$220 million in international reserves with an imminent US$80 million payment on a 2013 Credit Swiss loan.
Since then the Mia Mottley government has been negotiating with external creditors under the title, Barbados External Creditor Committee to sustainably restructure payments.
Most recently the committee has accused the government of ignoring its good faith proposals for renegotiating its foreign debt and proposing instead “restructuring scenarios” that ignored its suggestions during negotiations over the past several months.
Government has according to Barbadian media proposed to give creditors new bonds worth two-thirds of their original principal, with interest payments made twice yearly, at 3.5 per cent in the first two years, and 7.5 per cent per annum until the 2033 maturity date.
A second proposal is for bondholders to receive the full face value of the restructured bonds but interest payments would be fixed at 3.5 per cent per annum until 2044.