Mia Mottley, Prime Minister of Barbados: markets discriminate against the poorest countries

That rich countries, even though they have similar credit profiles to poorer countries, enjoy lower interest rates on their debt bonds is a type of discrimination, Mia Mottley, prime minister of Barbados, said Thursday.

The official shared the stage of the Annual Meeting of Governors of the Inter-American Development Bank (IDB) with the president of the bank, Ilan Goldfajn and the Minister of Economy and Finance of Paraguay, Carlos Fernández.

“The market has disproportionately affected countries in the global south,” said the president at the event taking place this week in the coastal city of Punta Cana, in the Dominican Republic.

Before the pandemic, Mottley noted, Ghana and Greece effectively had the same credit profiles, but the European country was borrowing much more than the other because of the assets the European Union can provide.

“There is no doubt that, unfortunately, the world has not seen many of the countries that became independent in the post-World War II era as it sees rich countries.

The financial markets do not treat them the same way they treat the global north,” she opined.

“Are you saying there is discrimination?” asked Michael Stott, Latin America editor of the

Financial Times

and moderator of the panel at the event.

“Yes, there is,” Mottley replied.

“And I also tell you that a difficult, but mature and necessary conversation is missing with the credit rating agencies.

“They themselves may not even necessarily be reflecting on the fact that there is inherent bias.”

His words echo what leaders in Latin America have said in recent years, including Carlos Alvarado, former president of Costa Rica, and José Manuel Restrepo, former finance minister of Colombia.

During the toughest stage of the pandemic, countries had to meet their market debt payment commitments, even when they needed their resources to face an unprecedented health emergency.

To this end, Mottley has been promoting the Bridgetown Initiative for a couple of years, named after his country's capital.

Mottley has approached the World Bank, the International Monetary Fund and governments to propose a “pause clause”, which would allow countries most vulnerable to natural disasters, such as Barbados, not to pay their debt in the period they need it most. the resources to serve their populations.

Mottley has also advocated reducing the interest rates paid by poorer countries in the global market.

“One of the main problems that we have faced, and in fact it will be one of the things that we will include in the next stage of Bridgetown, is that access to insurance is becoming very, very difficult, certainly much more expensive, and in some cases it will not be available,” Mottley said.

As extreme weather events become more unpredictable, insurance companies have raised their prices.

“When a region or sector becomes uninsurable, the financial system we use is challenged to its foundation because every loan has an insurance clause, whether it is a mortgage for a home or a large or small business loan,” he said. Mottley.

The countries of the global south “do not want money only after the catastrophe, we also want it before to avoid loss and, therefore, we have to increase the financing available for both climate.”

In his speech, the president of the IDB shared that, in his conversations with businessmen interested in Latin America, concern about crime and insecurity arises more and more.

he pointed out.

“It is incredible how many countries in the region point out citizen security as a problem.

It used to be like that in some countries and now it has become a completely regional issue because it has risen to a level of threat to stability,” Goldfajn said.

“It's not that crime wasn't here, but now it is affecting the ability to attract investment,” he added.

Fernández, for his part, agreed.

“It's a big problem,” he said, “if you look at the polls, before corruption or employment were at the top of the list of concerns.

Now, security is the main concern of the population in many countries.

“It is something that must be approached with knowledge and also with financial support.”