Any assessment of the national debt must examine the components of that debt. I am very disappointed that I cannot elicit any educated analysis from the contributors on BU, only political posturing.

In observing the political battle on this subject in the recent past, I note two incidents.

Incident No 1.

BU contributor Hants on the other blog on 22 November 2008 made, inter alia, the statement:

“The biggest problem facing Barbados is the debt left by the BLP.”

BLP supporter Eye95 responded as follows and objective observers should in their minds edit it for political content and retain the essence of the argument.

“Hants,

THE BIGGEST PROBLEM FACING BARBADOS IS THE DLP, WHICH DOES NOT KNOW WHAT IT IS DOING!

Stop looking for a scapegoat! What debt left by the former BLP Government?

In 2006 when the DLP was talking nonsense about the debt, the Nation newspaper of November 28, 2006 quoted economist Professor Frank Alleyne as saying that Barbados was not then in a debt crisis, contrary to what was being said by the then Opposition DLP.

He said that he had done and analysis and dismissed claims about a crisis as unfounded.

The retired University of the West Indies academic and “strong dems” went on to explain that he was not worried about Barbados’ debt, noting that if it had been consumption that was not building capacity, he would have been concerned.

In fact he said: “Much of that construction is in building capacity in the tourism and hospitality sectors and related ancillary facilities.

On the South Coast you will see the transformation in the hotel plant taking place. We did quite a bit of work modernising the airport and seaport.

That is the type of infrastructural activity which will redound eventually to supporting the activities of the tradable goods sector.”

Don’t get paranoid about the national debt, 30 per cent of Barbados’ debt is external and, most importantly, is manageable.

In some countries any debt incurred by the national insurance agency or social security agencies was not counted as national debt. Here we have over $1 billion of our national debt coming from national insurance.

What the Dems must never forget is that in 1991 it borrowed money in England at an interest rate of 13 per cent.

The BLP tried to get that loan rescheduled but to no avail. That loan will remain part of the national debt for the next ten years.

While the DLP is cutting wage and sending home people, the BLP used its time in office to cut taxes and create jobs.

When the BLP was in office, the national debt stood at an estimated 71 per cent of the value of Barbados’ gross domestic product (GDP).

The former government made a commitment to bring that down to 60 per cent by 2012. To do this, it agreed that it would not engage in net additional external borrowing over the period 2007 to 2012.

Up comes the DLP, which does not know what it is doing and seeks to borrow money (create more debt) to solve debt?

Hants, are you people aware that next Tuesday, the DLP will go to Parliament to amend the Special Loans Act, Cap. 105 of the Laws of Barbados, to increase the limit which the Government can borrow from $500,000 000 to $1 500 000 000?

The BLP left $2.2 billion in foreign reserve. The Dems licked-out $129 million in ten months and all you can see them doing is travelling overseas and buying expensive cars?”

Hants ran away from that, stating

“eye95 mussee right. I am sure he /she is far better educated than me.

I guess I made a mistake.”

Incident No 2.

Rumplestilskin – 25th June, 2009

“We do not need to read Mr.Henry’s article, indeed, if you read the blogs of three to four years ago, we bloggers ourselves predicted just this scenario, in light of the then impending recession and the ridiculous spending of the then administration”.

Royalrumble responded, and again you can edit out the politics and digest the substance..

“Rumplestilskin maybe you would want to itemize for the benefit of fellow bloggers the ridiculous spending of the last BLP administration that has, in your ill-informed opinion, led to our debt trap.

During the fourteen years that the BLP held the range of government in this country – between 1994 and 2008, the debt was raised by $1.4 billion and a blind man on a trotting horse can look around Barbados and see the benefits, the assets accumulated as a result of the money.

The blundering DLP wash into office in January of 2008 and as at the end of May 2009, they have increased this country’s debt by $1.5 billion. Let me reinforce the point Rumple. In fourteen years the BLP raised the debt by $1.4 billion while in sixteen (16) months the DLP raised the debt further by a whopping $1.5 billion and guest what – nothing to show for it. Not a single asset acquired, not a single initiative executed to build economic capacity that will help stabilized or grow this economy. I challenge you Rumplestilskin to show us where has the money been spent.

Rumpletilskin there is nothing wrong with debt if you have the savings to back it up and I know that you know that the BLP left over $2.7 billion in foreign reserves.”

Rumplestilskin has run away from that challenge, (maybe he is still formulating his response).

I have asked for some intelligent analysis of these two positions from anyone who cares, but especially from those who made the initial accusations, but none has been forthcoming.

The silence is indeed deafening.

I’d be interested in hearing from “livinginbarbados” and “Trained Economist: (What has become of him?) or any DLP blogger who recognizes the need to respond.

On credit ratings, they do not determine the cost of borrowing, but clearly are used by a lot of lenders as a proxy for doing their own due diligence. The recent experience underlying the financial problems in the US may make lenders less willing to do that, knowing that the credit rating agencies’ work is flawed. (This sort of thing happens periodically, and was very evident during the 1980s debt crisis, where a lot of participating banks in syndicated credits relied on the assessments of the lead banks to their subsequent demise.)

Even if Barbados’ rating is lower, borrowing costs may not suffer because the base rates are now much lower, so if a higher spread is imposed the total cost may still not look too bad relative to past borrowing.

There is research I read at the weekend (relating to AAA borrowers, I note), which noted the following. While usually when the perceived risk of an asset rises, investors will demand a higher rate of return in order to compensate for that risk. The facts on the ground suggest the impact from moving down a notch in the ratings environment is negligible.

While a blind man and horse may see the assets that have been created by some of the borrowing, it takes more peering to see the liabilities. My impression is that the money spent on infrastructure improvements are not generating returns to pay off the underlying debts, and are net drains on the budget. More broadly, in their defence, one can ask if the economy is performing better because they are in place. But that is a difficult exercise to do.

Rescheduling (extending terms, changing interest and principal repayment schedule) can obviously give breathing space to help deal with the burden of servicing the debt. If the lenders/markets grant this, then it’s also a sign of confidence in the medium term ability to repay.

That Barbados has made a lot of headway through FDI flows rather than debt was a plus. But, clearly, if those FDI flows are now drying up the pressures will mount. It’s hard right know to know if the loss of FDI seen recently is the start of a new phase, ie, investors have lost confidence in this country and will not return in substantial numbers/with substantial financing, or if they are merely being cautious now and will return once economic conditions improve.

It’s clear that the starting position of the current government, in terms of where the world economy was and how that would affect Barbados, was very disadvantageous. The politicos will argue about whether Mutt wasted what Jeff had put in place, but it’s a totally hypothetical discussion because the government that left office can say with impunity that it would have handled things better but have no decisions to make to prove that they would actually have done so. That a poltical bun fight, so let them at it.

@Hopi

Do you have Microsoft Power Point on your PC?

@Hopi

We have converted to PDF just for you.

I did not even realise there was a ‘challenge’ i.e. Rumplestilskin has run away from that challenge, (maybe he is still formulating his response).

Silence deafening? Because I just do not feel like arguing for the sake of it, when I directed the blogger to commentary of three years ago, that explains things clearly and fully, including identifying the expenditures then that needed to be prevented?

No, I just ignored the political blatherings, as you yourself suggest.

Inkwell ‘Rumplestilskin maybe you would want to itemize for the benefit of fellow bloggers the ridiculous spending of the last BLP administration that has, in your ill-informed opinion, led to our debt trap”.

I was tempted to write a response, to the above, at the time, that the ‘blind man on a trotting horse may have to be careful to not run into the $ 250 million White Elephant down by Kensington’.

But, that would have been flippant.

The economist you quote states that the expenditures were building capacity rather than consumption. Basic error there, if your quote is correct.

You mention above ‘Rumpletilskin there is nothing wrong with debt if you have the savings to back it up and I know that you know that the BLP left over $2.7 billion in foreign reserves.”

WRONG.

Firstly, the good economists statement, if you have quoted correctly, is itself wrong. The expenditures were NOT all building revenue earning capacity.

What is wrong with such debt, is whether the underlying expenditure is for the purpose of income generation, absolutely necessary infrastructure OR instead spent on non-revenue earning ‘expenditures’.

That was precisely my point of three years ago, that the expenditures did not meet this requirement.

You wanted examples? How about $ 250 million plus on Kensington, how many tourists does that bring?

That was an example of political posturing for a show, at the expense of taxpayers.

That money would have been better spent on supporting developing industry, agriculture, whatever.

Unfortunately, I would need some transparency in Gov’t expenditures to have the exact figure. I am not an elite to have such.

How about the $150 million plus, on the highway expansion.

How much income does this generate?

That again, would have been better spent on industry development, if at all.

What exactly is the final figure, on the GEMS projects, $250 million and counting?

How much revenue have these hotels earned. How about the auditing of these expenditures, INCLUDING THE ORIGINAL PURCHASE PRICES and due diligence there?

Sorry, but I cannot quote exact dollars there either, because we have no audited statements for expenditures of over Bds $200 million dollars.

But maybe I am ‘policital posturing’, if you think that a country can spend that sort of money without any justifiction and support for the funds extended.

There are three glaring examples. Three alone and we are already close to a billion dollars in debt for the taxpayers to saddle for years to come.

Further, your ‘silence is deafening’ statement was clearly incorrect, when I directed the blogger, to the extensive discussion of three years ago, why should I repeat everything said then, when the advice was already ignored at that time by ‘the bloggers masters’ and it is readily available for reading?

Inkwell,

I am not ‘political posturing,’ but you are, you have exposed your coat-tails, couched in a supposed ‘independent’ query of ‘removal of political posturing’.

I also wonder why your comment and supposed ‘challenge’ was hidden away here, rather than on the specific blog entry?

Have a great day, maybe you can go down to Kensington and think of ways that the building can earn revenue, but probably my ‘ill-informed opinion’ will not be followed.

Bye, I am off to work lad, to pay for the white elephant and the unnecessary spanking new tarmac that I will drive on.

Have no fear, as I said already, I hold no candle for any political party and will follow up on these sites for this current Government to answer such questions as us who seek transparency wish.

Such as the audited financial statements for GEMS, including purchase price and detailed expenditures.

Peace

@POC
I was not at the event where Winston Cox spoke, but the reports I read indicated that for Barbados the exchange rate is sacrosanct. My underestanding of that word and Barbados’ staunch/steadfast/dogged/immoveable determination to not move from the fixed exchange rate at its level of 2:1 with the US dollar for around 30 years seems consistent with sacrosanct.

In the case of the structured finance products at the core of the current financial crisis, the ratings agencies played a central role in helping the investment bankers structure the products that they then rated. Fitch, in particular, did quite a lot of this.

There is a nice piece at http://www.brookings.edu/papers/2008/11_orgins_crisis_baily_litan.aspx

which clarifies the role of the ratings agencies in the structured products market.

@Rumplestilskin

I am happy to see your response. However, to clear up a misconception of yours, the challenge did not come from me, it came from Royalrumble. I was merely pointing out that the challenge seemed to be going unanswered, and that it ought to be answered, if you were seriously debating the issues.

However, it seems to me that in spite of , to quote Royalrumble, “the ridiculous spending of the last BLP administration that has, in your ill-informed opinion, led to our debt trap”, the major portion of the last administration’s capital expenditure did go towards improving infrastructure as RR claimed, even in the case of Gems, though that venture has proven to be, to date, unprofitable.

RR’s major point was that, despite these “wasteful” expenditures, the last administration, when it demitted office, left substantial foreign reserves which have since been seriously depleted with little to show and he challenged you to explain this.

Quote “In fourteen years the BLP raised the debt by $1.4 billion while in sixteen (16) months the DLP raised the debt further by a whopping $1.5 billion and guest what – nothing to show for it. Not a single asset acquired, not a single initiative executed to build economic capacity that will help stabilized or grow this economy. I challenge you Rumplestilskin to show us where has the money been spent.”

Your response did not address this major point. He is not correct in his assertion that”DLP raised the debt further by a whopping $1.5 billion ” is he?

Inkwell, with your arrogant intellectual sneering, what do you think about what Royalrumble said?

You cant debate yourself, but no one wants to debate you. Ask yourself why. Pride and arrogance cometh before a fall.

Look forward to your info from London.

@Sargeant
The Central Bank’s bulletins have the tables from which you can derive the figures.

@Sargeant

A disclaimer.

Please note that I am not a source of the figures referred to in your post. I was quoting Royalrumble. You will also note that in the final paragraph of my post of June 30, 2009 at 12:08 pm, I too queried the increase in debt of $1.5 billion he claimed.

I trust that the above exonerates me from complicity.

livinginbarbados,

We really expected better from you!! Surely, we are NOT seeking to define sacrosanct in the context of our exchange rate affairs as you so did. Rather, what we have been seeking to do – via BU and other fora – is to convince a lot of people in Barbados that the social, material and financial costs of maintaining this parity of BDS $ 2 = US $ 1 – on a daily basis – have been enormous to the country. And the benefits of this parity ever so comparatively little.

Also, what we have been seeking to do is to get many of the masses and middle classes to understand that a future elected PDC Government will pursue the policy of abolishing ALL EXCHANGE RATES WITH THE BARBADOS DOLLAR, plain and simple. These were essentially our emphases, among other ones, on the above blog. So, spare us the impertinence, livinginbarbados.

As it relates to the fact that water rates have been increased in Barbados, effective tomorrow, July 1, it shows that neither the DLP nor BLP has the fundamental answers to many of our problems. For, it is certainly the case that thousands upon thousands of people in Barbados have long been recognizing that both these joke parties have for years been seriously grossly and recklessly mismanaging the social, political and other affairs of this country.

So, whereas the DLP and BLP are trading feeble arguments over each other’s positions inside or outside of government relative to this water issue, the broad masses and middle classes continue to greatly suffer in this country, from the harmful policies and programs of these backward political parties. Surely, these segments of people in Barbados MUST MAKE SURE THAT THESE TWO IGNORANT PARTIES ARE DEMOCRATICALLY REMOVED from the parliament of this country.

Finally, and back to the issue of these increases in water rates, it is a total bogus fallacy for individuals like Mr. Kellman, the Parliamentary Representative for St. Lucy, to seek to justify these increases in water rates by seeking to compare these said increases with the particular “prices” of bottle water and other commodities and services that are offered for sale in Barbados and for which the demand for them are reasonable. These persons must know that it is impossible to reasonably compare the “prices” of all such commodities and services in Barbados, simply because some of them are social goods and some are commercial goods. Some have different price setting mechanisms Some have different demand and supply factors, conditions and determinants. Some are provided by monopolies, some by oligopolies and some by firms that compete with many other firms in the market place. Some of these firms providing these commodities and services are state-owned enterprises and others are private sector enterprises. Some are wholesalers, retailers, etc and some are distributors, producers, manufacturers.

So, from such multifarious perspectives it is total absolute rubbish to compare bottle water being sold by say, Eddies – a restaurant – on Bolton Lane, Bridgetown, at two dollars in Barbados, with totally unjustified unnecessary increases in the only commodity – potable water – supplied by this state owned monopoly BWA to the residential, commercial and other customers of it.

PDC

Excellent point on the relationship of the NIS scheme to our economic abilities, particularly earnings capacity and debt financing.

When I first heard of the deferral, I did raise an eyebrow, I would be hesitant to reduce funding to the NIS at any time, this is almost a last resort.

Quite right that it is a short-term measure, as one cannot sustain such an approach for very long, due to the effect on the asset side of the NIS scheme, as is stated above.

This is clearly an attempt by Gov’t to boost the economy by as ‘low cost’ means as possible and the unfortunate state of the global economy and the impact on us demands direct Gov’t input.

Due to the demographics mentioned, I am not very optimistic of the future state of the NIS scheme, as you know, we are not the only ones in this boat.

There are other factors also, that may impact us then, such as emigration to other countries seeking qualified workers.

North America has the same demographic challenges and as you know Barbadians have a great liking for that area.

If the ‘gates’ opened further and it became even more attractive to emigrate to North America, our own demographics would be further challenged such that the NIS scheme would be beyond repair, so all current planning and actions would be moot at that time.

As is noted above we cannot predict the future, ‘dynamic’ is certainly the right word.

What must be done now, is limiting our lifestyles and related costs of importation, such that foreign reserves are maintained at best available levels.

While we need to maintain economic activity, indeed to boost it at this time, excess reduction on foreign reserves must be prevented at all cost.

This will also go some way toward preventing a further downgrade, as noted above, irrespective of how we view the status of the rating agencies.

Peace

@RJR Adams/Justin Robinson/Rumplestiltskin…

The IMF’s Financial System Stability Assessment – Update for Barbados (http://www.imf.org/external/pubs/cat/longres.cfm?sk=22720.0), published this February, and reported on at least by the local papers, raised serious concerns about the NIS’s investment strategy and that it cannot meet its stated objectives with the investment portfolio it has. I have not seen a government response to that in the public domain.

@Rumplestiltskin
Without being facetious, everything starts off as a short-term measure; it’s time and duration that determine if it is otherwise. So, the issue is to watch what happens with the deferral, and if it is rolled over. Also, behind the scenes, as economic conditions remain strained, one has to be aware of the pressures on NIS contributors to fall into arrears, and how that is dealt with. Arrears may be absorbed for sometime, but would then have to be addressed (see BWA as a comparative situation).

I would imagine that this topic will be one of great interest during Barbados’ next Article IV Consultation with the IMF.

livinginbarbados,

You continue to write POC. Clearly, our acronym is NOT POC. It is PDC – which stands for the People’s Democratic Congress. OK.

You query what will replace these rate parities, but at the same time falsely engender some postulate that deals with some type of international barter system serving the country in circumstances whereby there are no exchange rates parities that Barbados would have with the outside world.

And, what is worst, you border on the laughable about people NOT generally being in the business of valuing their goods….. and then having to give them away.

livinginbarbados, get up out of your euro-centric western centered dream world aka cosmology, and fast!!

Quite quickly, this. When we abolish exchange rate parities, what it would substantially mean is that Barbadian importers and investors will simply have to get the currencies of the goods and services in which they are denominated. If a truck is coming from Japan to Barbados at US $ 20 000, the Barbadian importer would have to get US $ 20 000, to send to the Japanese exporter.

Where our seaport is concerned, the entity in charge of the seaport will simply AUTONOMOUSLY reasonably charge monies ( NOT TAXATION) for the services rendered to the importer with regard to the getting the truck through the seaport. It will do so to reflect the true cost of operating the port and to make a profit. And, it will simply start from a zero-“price” premise.

Too, all of those goods and services that would be intended to be sold to external countries or buyers, or that will be engaged by the latter from here or overseas, will be denominated by the local sellers in whatever foreign currencies they prefer, whether or not the activities surrounding the delivery of those goods and services are located or based or done here, but for which in the end the ultimate purposes would be to service those particular external demands. For instance, if there is a plot of land in St. John to be leased ( NOT SOLD – BECAUSE NO FOREIGNERS WILL SO-CALLED OWN OUR LANDS. THEY WILL HAVE TO LEASE THEM IF ANY THING) by a foreigner or foreign enterprise, the local person or enterprise will reasonably charge in US or POUNDS or YEN as if the land was in the US or UK or Japan. Simple.

Well, we also envisage the setting up of a National Currency Board (NCB) that, et al, will be responsible for managing all currency stocks in the country, and for managing those currency flows into and out of the country. Too, there is more to that type of proposed institution, but for now just that bit.

The Barbados Dollar will still continue to be used very much for local purposes. An exchange rate parity system will still remain in Barbados, but will do so to serve the purposes of those foreign countries, foreigners and foreign enterprises that among themselves and in the final analysis of time might be recognizing their own need whilst in Barbados to have international currency exchanges and at their going rates. E.g. A Briton who is visiting here and has Pounds but wants US Dollars, and based on the then existing international rate of exchange of the US Dollar with the British Pound, will be able to get his share of US dollars for British Pounds based on an international rate from a local financial institution or via the same NCB. So there you have it, livinginbarbados.

Thank You.

PDC

I have read the comments from Avinash Persaud. We appear to disagree as to whether or not the CRAs crossed the line in advising on the structured products they then rated. I guess we are relying on different sources of information.

The congressional hearings in the USA on CRAs seems pretty clear that the line was crossed, but that does not mean it was.

The more substantive point in my view, is the fact that in the area of structured products, like the Mortgage Backed Securities and the Collateralized Debt Obligations the financial markets were almost totally reliant on the ratings granted by the CRAs. In this respect the CRAs seem to have failed miserably in their gate keeper role.

@David,

First, I had to go and look up “pellucid” which may help the next pub quiz performance if I can remember the definition.

Second, no intention of hijacking the topic. To my mind the question “do the rating agencies matter” has a broader and more pertinent implication for Bds than that set out by the presentation.

Everyone’s current favourite whipping boy, S&P, put out a report a couple of years ago on demographic trends in 32-odd advanced economies (EU 25 inc). This study predates the crisis. They concluded that, in the absence of action to close pension gaps, the fiscal pressure to meet retirement and health costs would see half the ratings of those nations looked at junked in 20 years; and 80% at sub-investment level in 30.

Now, in a more dire financial 2009 context, when Bds gets a downgrade and its demographic profile is not far removed from some of those in that study (timing is the main difference) bells ring for me on the ageing costs front.

I am poorly-placed to offer anything on NIS operational mattes. But it would be a surprise to me if the local brains are not already in place, nearby or easily consultable.

I will say, though, that the NIS equity portfolio composition is surprising to me in that financials weigh so heavily. The data is old (2007) but half the top ten holdings are banks or insurance cos. The positions in First Caribbean, RBTT and BNB are equal to the entire worth of all the international shares held. That looks decidedly skewed.

A final thought on the international portfolios (BDS$130m or so). These are managed by Merrill Lynch and Oppenheimer. Without becoming a jargon machine these are “actively” managed funds, another way of saying returns depend largely on the skill of the managers.

I have yet to see a serious research paper that shows active management to be persistently superior to passive investment (“passive” being buying entire markets as represented by an index such as the S&P500) in terms of either costs or returns. For the hardcore, S&P produce a scorecard on this annually:

http://www2.standardandpoors.com/spf/pdf/index/SPIVA_Report_Year-End_2008.pdf

And for the even more hardcore insomniacs here’s a little something on the latest developments in fundamental indexing, a variant of passive investing:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1372942

In light of the research it is not clear to me why a NI/pension fund would take on manager risk (in all its forms) if a superior alternative is available.

Last paragraph, second last line, delete “and benefits” between the words “costs” and “with”.

PDC

As a member of the board I cannot comment on NIS matters.

Whooo, PDC. Such passion. I’m sorry to interrupt your private conversation (on a public blog) with LIB. I suppose that he will understand what you mean. And good luck in capturing the government of Barbados. If and whenever that glorious day should occur, I hope that your constituents will be permitted to question your strange views!

So, basically the old term ‘buyer beware’ comes into play.

Sadly, the reliance on the ratings agaencies could arguably have been ‘justifiably’ misplaced, as the buyer did not and indeed could not, understand the detailed underlying risk profile of what they were purchasing, due to the remoteness of the ‘instrument’ from all of the underlying assets per se.

Thus, reliance on an ‘expert’ was logical, but then it appears, neither did the rating agencies understand exactly what was happening.

This is one of the dangers of ‘modelling’ and statistics, that firstly, compiling various underlying units in this case assets, into segments, which in itself can be flawed or dangerous at best, then secondly applying ‘assumptions’ that are supposed to create understandability but instead add uncertainty, a false sense of ‘knowing’.

I will try to remember and get the link of an article that refers to the brilliant mathematician who was supposedly one of the persons at the root of the crisis.

It was fun reading, but that was a while ago, will look for it.

Peace

livinginbarbados,

Much of what you stated in the first paragraph of your last blog under this thread is correct. And, what you described there has largely come about through the broad mass of Barbadians and many others’ being indoctrinated and trained in Western Finance and Economics – two very odious ideologies and practices.

However, you said: “If I visualize this new scenario for Barbados properly, there is a matrix, so that if “Mr. Hinds” wants to go to Equatorial Guinea, for example, we can check what it would cost the average Equatorial Guinean to stay here. If we have no such information, we can find a near equivalent?”.

Of course, we in Barbados must and can know what it would cost the average Guinean to stay here!! So, there is no real question about the availability of that information and hence no real need for an equivalent. Although the latter would be desirable of having still for academic purposes.

The foreign exchange the NCB would give you – the Bajan traveller – for your own needs would be sometimes based on analyses of broad ranges of expenditures incurred/likely to be incurred (flexibility); would be based on average expenditures incurred/likely to be incurred; would be based on analyses of spending trends; and would be based on the net foreign exchange earned by the productive sectors of the country, or the net international reserves position of the country, from time to time.

Such considerations of flexibilities, spending averages, and spending trends, in particular, would be done to properly counter the types of issues you raised in the latter parts of your last the submission under this thread, without losing sight of the real objectives of this type of approach that will replace exchange rate parities with the Barbados dollar; and, yes, given that we would recognize that there will be differences in the real costs of many travelers to Barbados and of Bajans to the outside world.

livinginbarbados, the approach of making sure that transactions involving the importation of goods and services into Barbados, or the exportation of goods and services, are simply denominated in the foreign currencies required by the dominant parties would therefore be implemented to help achieve certain objectives:

1) to make sure ( along with the approach of zero-“pricing” imports into Barbados) that Barbados is NO LONGER seen as “an extension” of the US, UK, and so many other economies, from the point of view that Barbados must NOT continue to bear the great costs of producing and distributing goods and services in those economies;

2) to make sure that the domestic long term costs ( money-wise) of local production and distribution are brought on fairly equal terms (money wise) with those of other countries, esp through the greater, direct use of foreign currency values/local and foreign juxtapositions in Barbados ( of course NOT the quantities of commodities and services imported, distributed, produced etc. being lowered in Barbados – but in that sense then to greatly increase them consistent with certain realities);

3) to make sure that the costs of living and do business in Barbados are reduced eventually;

4) to bring about greater amounts of actual foreign currency inflows and stocks in the country, esp based on real activities, in the medium to long term;

5) to ensure that the gaps in the external government/private debt to GDP ratios are eventually significantly narrowed, esp viz-a-viz the real elimination of the domestic “price conversion component” and the expected increases in foreign exports/foreign currency earnings; and

6) to remove much of the very unnecessary and costly paper and administrative work that is now required in relationship to certain foreign exchange-oriented transactions

So there you have it again, livinginbarbados.

PDC