ST. JOHN’S, Antigua – The Antigua and Barbuda government says it may suggest to some of its creditors that they consider taking a haircut even as it remains confident that it would be able to meet its obligations to pay the debts owed as well as meet the increase wage and outstanding arrears to public servants by the end of this year.
Prime Minister Gaston Browne as he appeared on the ABS Radio and TV on Sunday night (CMC Photo)Prime Minister Gaston Browne, in a two-hour television interview on the state-owned ABS Radio and TV on Sunday night, said that his administration is banking on receiving at least US$25 million from the Barbados-based Caribbean Development Bank (CDB) as well as other sources of funding including floating a US$200 million bond.
Browne said he hopes the CDB funding would become available within the next “30 to 60 days” noting that a planned board of directors meeting of the region’s premier financial institution a month ago had not taken place.
“So we expect that sometime this month or next month that they will have this board meeting,” he said and the US$25 million made available to St. John’s.
“We have earmarked those funds for certain funding including giving public servants an increase,” he said, adding that he would not want to pre-empt the negotiations with the trade unions.
“A negotiating committee was established in 2018 and you would recall we gave a five percent and we are now negotiating the final amount. I believe initially there was a proposal for seven percent which was rejected by the various bargaining agents and we have asked our negotiating teams to increase the amount.
“So I am hoping that within the upcoming weeks they will come to some agreement and we will have a formal proposal before the Cabinet which we stand ready to accept,” he said, adding “it will be retroactive and we certainly put the arrangements in place to also pay the back pay….before December 31, 2022”.
Browne said that in pursuing other initiatives to fund socio-economic projects here, his government has floated a US$200 million bond acknowledging that the island had not fully recovered from the impact of the COVID-19 pandemic.
“You would recognize that we have not recovered the full revenue, we are still about maybe 10 percent below 2019 levels, so we have to borrow to fund the expenses. We are looking at different sources.
‘As you know we would have floated a bond earlier in the year, a US$200 million bond. Unfortunately the initial subscriber did not offer a good deal. So it was just last week that we were able to get them to transfer the bond to another entity and I believe next week we will sign off on this bond on the basis that all goes well, funds should start to flow from that bond probably within the next 14 days.
“On the basis of that coming through, clearly we will have the type of funding in order to pay the back pay and to cover other expenses. We know for example that our creditors, those who provide services to the government…many of them have arrears and we want to make sure we make some substantial payments”.
Browne suggested that for some creditors “suggest that they take a haircut and then pay off the balance,” adding “we want to make a significant dent in the outstanding payables so that we can have more monies in the economy and even to fuel more robust growth…”.
He said that while the economy is predicted to grow by 7.5 percent next year, “when you look at the plethora of projects coming on stream and the fact that the public sector itself will be poised for spending more money within the domestic economy then it means we should be in a position to even exceed that seven and a half percent”.
Browne said that as a result of the COVID-19 pandemic, the arrears owed “would have built up and there is some frustration within the society and I want to take this opportunity to thank our creditors who would have shown some forbearance and I think there is a silver lining now and we should be getting the necessary funds to bring some relief to those individuals”.
Browne said that the net proceeds from the US$200 million bond will be about $160 million “because the interest is paid up front and there some fees, organizational fees, negotiating fees and so on…obviously all of it will not be paid in one tranche, but it could be over a period of 60 days.
He said the coupon rate on the new bond is much more competitive than the original bind offering where the overall yield to the investor would have been over 10 percent.
“We had said earlier that the bond was oversubscribed because we had a subscriber that had shown an interest in subscribing for the full amount of the bond. They have given us a better deal….we are closer to seven which is still acceptable,” Browne said, adding that the difference could amount to at least eight million US dollars in interest “that can literally build a school.
“We are very cautious, prudent in the way we handle public resources and we always ensure we get the best value for money for the people of Antigua and Barbuda,” Browne told the interviewer on the state-owned media platforms.
