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Governor Marion Williams Says Foreign Reserves “Sufficiently Adequate”, No Need To Approach The IMF At This Time

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Governor of the Central Bank of Barbados, Marion Williams
Governor of the Central Bank of Barbados, Marion Williams

Yesterday Governor of the Central Bank of Barbados Marion Williams delivered the quarterly review of the economy for the second quarter. In light of the prevailing economic conditions her presentation was eagerly awaited and continues to be analyzed given of the unprecedented global economic conditions.

Governor Williams was unequivocal in her assessment of the adequacy of the foreign reserves. There has been much comment on BU concerning the rate as which the foreign reserves are being depleted. The Governor quoted in the daily press suggests the foreign reserves are “sufficiently adequate.” Barbados’ foreign reserves currently register at 1.3 billion dollars. Barbados will join International Monetary Fund (IMF) member countries allowed to withdraw USD80-85 million dollars from the special drawing rights facility which will serve to provide support to the reserves.

The willingness of G20 countries to approve the SDR drawdown is interesting and ironic. Wasn’t it the G20 countries who precipitated the the destruction of the global financial markets? The result of it all has been to decimate the economies of developing and emerging economies around the globe.

How does the Governor’s assurance to Barbadians fit with the pronouncements by the Gurus of Economics Messrs Dr. Frank Alleyne and Dr. Avinash Persaud? Both Alleyne and Persaud have been quoted in the media since the global financial meltdown that Barbados should approach the IMF sooner rather than later to solicit financial support before the economy worsens. Our impression is they were not referring to SDR drawdown but the standby arrangements which the IMF avails to members with the obligatory conditionalties attached. Governor Marion Williams was lucid in her assessment yesterday when she indicated NOW is not the time to enter a standby arrangement with the IMF.

Governor Williams reference to the 1991 –1992 period when the foreign reserves bottomed at 6 million dollars may yet be irrelevant. The current crisis from all reports is unprecedented and the need to utilize untested responses may yet prove to be the greatest challenge for Barbados.

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169 responses to “Governor Marion Williams Says Foreign Reserves “Sufficiently Adequate”, No Need To Approach The IMF At This Time”

  1. Bimbro Avatar
    Bimbro

    LIB, the other economic problems to which u allude are a matter for our esteemed Chancellor and PM! I in worried bro!! Dat’s what they’re paid to do. I’m sure they’ll handle it successfully!!

    LIB, u still have n’t told me the time of the next flight to Kingston!! Don’t u want to be on ‘Air-Jamaica’?!!

    Laaaaaaaaaaaddddddddddddd!!

    Anyway, it’s understandable dat ur in love wid Bim!! Jes doan stay too long, dat’s all!

    Laaaaaaaaddddddddddddddd!!

  2. livinginbarbados Avatar
    livinginbarbados

    @Bimbro, I never like to presume when it comes to other people’s knowledge, so I’m glad the economics lesson was not needed; never wasted as others might be less educated than you. As you will be return to Bim and as a millionaire, I may just have to see if I can stay on. Better still, I may have to advice the government how to get some revenue out of rich returning residents, as every dollar in the coffer is precious–you know how big and widening is the deficit here–and you’d expect that the returnee would love to do all he could to help keep the nation strong.

  3. livinginbarbados Avatar
    livinginbarbados

    @Bimbro, given the high cost of living in Bimshire, I’d strongly suggest that you stock up well before leaving England. A visit to Poundland would be in order, http://www.guardian.co.uk/lifeandstyle/2009/aug/04/poundland. Even though many British staples (such as baked beans, Jaffa cakes, and Cadbury’s chocolate) are available here, their costs, even with the pound falling over the past two years, have not shown any decline. The government has talked a lot about curbing the cost of living, but you should strongly think about the cost of LEAVING Hingland. Local goods are no substitute, except for ice cream, where BICO is much better. I really wonder, if you are a lover of English beer, whether you have thought this move through: Banks is nothing compared to the wide range of bitters you have on tap in England, and even after several bottles, you are still sober and thirsty–the worst of all worlds. But, of course, you will ignore my advice, but don’t let anyone say I did not warn you.

  4. livinginbarbados Avatar
    livinginbarbados

    @Sargeant
    “However you are a cosmopolitan man so you can keep your escargot” [I guess the cross I bear for being ‘cosmopolitan’ (better than ‘uppity educated newcomer’, for sure) is that I can easily slip into new ways. While I have enjoyed immensely escargots elsewhere, I have not eaten the snails here. I have on good authority–albeit from a very sane Jamaican lady–that a French lady here has perfected a recipe that is to die for. Though it has nothing to do with wealth directly, I think that as these similarly cosmopolitan people diversify what they eat, and Bajans with their less cosmopolitan ways flounder to fill their stomachs with macaroni pie, we will hear “It’s the rich what gets the pleasure, it’s the poor what gets the pain”. Despite his protestations, I detect in Bimbro’s “Sargeant, as for Bajans eating and enjoying snails – as with most things, it’s probably only a matter of time before the habit catches on!” a hint of the corporate greed of the returnee-come-lately, and would not be surprised if, once he finds his UK millions dwindling in Bimshire, that he will rise like a phoenix, full English accent flowing, and start a processing plant for snails. We know that once the idea comes from forrin, it will be taken to heart. Mark my words. I can see it now, soused snails, with all the features.

  5. Bimbro Avatar
    Bimbro

    as a millionaire, I may just have to see if I can stay on.

    ***************

    big disappointment! I keep telling u ur req’d there, not in Bim!!

    ‘Thank u for the advice, LIB, but, as u intimated, HI WILL IGNORE IT!!

    Laaaaaadddddddddddddddddd!!

    Re: the snails; please leave d Bajees alone, day doan need nuh advice from u!!

  6. livinginbarbados Avatar
    livinginbarbados

    @Bimbro, one of the great things about the modern world is the absence of a need to move to do things. So, much of what I need to do with Jamaica I can do via the Internet and telephone: it’s much better use of time and money (and I’m no millionaire in pounds or even B$). It means that I can also do things in MoBay at the same time as in Kingston, through my electronic contacts. The real obstacle is moving money, which is less simple, and too costly. That I am figuring out how to fix.

    I often wonder if I am observing or advising; the line is fine. But as with all things, it’s there to be ignored, as you also do with your own counsel. But, that’s what makes people interesting.

    Never let it be said that people would look a gift horse in the mouth and as people have noticed when countries have resources they often do less well with them than countries without. Will the snails be in the same mould? Why bother to use what you have in abundance when you can spend scarce foreign exchange to bring in fine things from abroad? Therein lies another lesson on the road to success. Time was that no one wanted that sticky stuff seeping through the soil in Texas…

  7. Sargeant Avatar
    Sargeant

    LIB

    I don’t know who described you as “an uppity educated newcomer” but it looks like it stung, however it seems like you can’t stop help yourself from getting into hot water. I mentioned in passing that you have a fondness for a certain mollusk and you proceed to attack Bajans by criticizing their gastronomic preferences. I didn’t mention “mannish water” but you felt comfortable in attacking the ne plus ultra of Bajan epicurean delights i.e. “the macaroni pie”.

    Let it be known that I bear no responsibility when Thompson phones to inquire about your immigration status; lord knows I tried to help but you seem to be driven by forces beyond my control.

    If you ever aspire to work in Barbados you have just committed what we call a CLM or “Career Limiting Move”.

    I hope you enjoyed your rabbit fritters in Dominica, next time you visit you should try the mountain chicken (of course being a cultured man you probably know them by the other name “frog legs”.)

  8. livinginbarbados Avatar
    livinginbarbados

    @Sargeant,
    Have a closer read. It is not the culinary habits that are at issue. My point is that there is a known demand for the things that Barbados is trying to destroy. Nigerians have approached the government with a view to harvesting those and the results and responses have been at best lukewarm. I even heard one Nigerian potential investor discuss it on VOB/Brass Tacks. So, if you say you have an economy that is about increasing value and incomes, looking to innovate, etc., then you need to ask why such opportunities are not taken. I had a conversation with the PS dealing with agriculture several months ago and can attest to the lukewarm attitude. It’s not much different to staying with say sugar or banana when the industry continues in decline and then wondering why your economy is stagnating. If flowers or other fruits were produced for export would that not be good?

    The macaroni pie aspect is another one of those cake and eat it too aspects. People complain or opine about health issues and expect something miraculous to happen without changing diet and life style. It’s not even being devil’s advocate.

    I quite like the ‘uppity educated newcomer’ moniker because I find that I am in quite illustrious company, which I’m sure was not its original intention.

    As for working in Barbados and career limiting moves, I resigned my job and now that I work for myself, I guess I am not into self limitation.

    I never found rabbit fritters: sweet and sour, jerk, stew in broth, baked, water (like mannish), smoked rabbit were all on offer, and they were all excellent.

  9. Bimbro Avatar
    Bimbro

    LIB, having now got that off ur chest, do u know the way to the airport!! If not, take a taxi!!

    Laaaaaaadddddddddddddd!!

  10. livinginbarbados Avatar
    livinginbarbados

    @Bimbro, you seem to not grasp how the world I deal with works. Here I am in Barbados, but I am attending a conference in Denver. As I need to go to the British High Commission here to see someone, I cannot go to Jamaica. Then I have a meeting in Tokyo this evening.

    When you leave Blighty you’ll also appreciate that intra regional travel is as hard as tooth extraction without Novacane: to be avoided at all costs–and it is very costly. Ask Adrian Loveridge. Anyway, I’m sure you’ll get the hang of it when you make the big return home. We’re advanced down here, even without the Underground or the Millenium Dome.

    Also, I have to be honest, the Jamaican food at Kingston 10 is so good that I have no real need to head to Yard to even get the essential nutritional needs. Yabba!

  11. Bimbro Avatar
    Bimbro

    Cheers!! Ga long an tek all d reggae wid u!!

    Laaadddddddddddddd!!

  12. livinginbarbados Avatar
    livinginbarbados

    I have just seen the Advocate (p3), which goes directly to your question about use of reserves, but with an ominous conclusion. The PM is reported to have said that BOP support loans are no longer hidden/concealed. I’m not sure when that practice ended but it means that the BOP data were falsified and to make that consistent then data on debt service was also falsified. For completeness, the CBB’s accounts were possibly falsified. It will be interesting to know if this is picked up by the IFIs and rating agencies. This may lead to a request for the auditors to be questioned, and possibly fresh audits if Barbados goes to borrow from IFIs.

  13. livinginbarbados Avatar
    livinginbarbados

    I’m not in the mood to play Sherlock Holmes. But assuming the PM did not misspeak about the recent borrowing, someone may have some explaining to do.

    I quickly noted the IMF’s 2007 report, Barbados: Report on Observance of Standards and Codes—Fiscal Transparency Module
    Barbados: Report on Observance of Standards and Codes—Fiscal Transparency Module, http://www.imf.org/external/pubs/ft/scr/2007/cr07338.pdf. The matter of public borrowing for projects is known to be murky:

    para 20. A number of PPP infrastructure projects have been initiated in recent years, without a surrounding framework law. As a result, the process for agreement on such a contract is unclear, and while the nature of the contract (e.g. to build a prison or hospital) is made public, the exact nature of the financial agreement is unclear, as is the precise allocation of risk. PPP arrangements are off-budget. In some cases the difference between
    the PPP arrangement and a bond-financed government investment project is unclear, save that under the former, no debt is acknowledged in the government accounts.

    Para. 57: Information on gross public debt for the central government is published monthly and annually; however this may provide only a partial picture of public sector indebtedness. The Accountant General’s monthly financial report which is tabled in Parliament provides details of debt raised during the month and for the year to date, by debt class and lender/project. The report also provides a detailed composition of debt service for the month and year to date, by debt class. A statement of outstanding loans’
    sinking funds also is provided. The annual Report of the Accountant General, which is audited and tabled in Parliament, provides similar debt information for the year. In addition it provides a detailed analysis of debt on issue and outstanding loans, including
    interest rate and principal outstanding. The Monthly Digest of Statistics produced by the Barbados Statistics Service provides information on debt charge only. None of the reports
    provides information on debt arrears and debt swaps, nor do they provide a statement of past and future debt service requirements and strategies to manage the future service requirements.

    The very curious can follow the money trail.

    Some of the obvious questions are:
    What happens if there is no record of the borrowing? Then, it seems that there cannot be a record of the spending.

    How can this go on unnoticed? Some collusion needs to take place, and more than one set of accounts needs to be doctored.

    I’m sure that those with financial and legal nous can figure out some more questions and possible answers.

  14. David Avatar
    David

    @LIB

    Are you not being hasty in your use of the word ‘falsified’?

    Isn’t the change linked to the accrual system of accounting implemented recently?

  15. livinginbarbados Avatar
    livinginbarbados

    @David,
    “Are you not being hasty in your use of the word ‘falsified’?”[Read what the Advocate reported: “Years ago when governments used to conceal borrowing for Balance of Payments support they would list a whole set of projects. That is not the modern approach to this exercise. See
    http://www.barbadosadvocate.com/newsitem.asp?more=local&NewsID=5349. We do not know how many years ago, but we know that this exercise is different. But to conceal you must falsify. The IMF report points to gaps in information, and I got a copy of the AG’s report yesterday, which I think mentions similar–but I need to read again.]

    “Isn’t the change linked to the accrual system of accounting implemented recently?”[No. Accrual broadly means recognising things as they are scheduled to happen, not just when the cash flows. For example, recording that you have debt service DUE not just that you have debt service PAID. It’s prudent, so that you acknowldge an obligation ahead of having to settle it in cash.

    This is different. If, for example, you do not record the debt there is no debt service to record. Zero in, zero out. What the PM’s statement suggests that is the the level of true government indebtedness was systematically UNDERRECORDED. But he does not clarify when that might have stopped and if it was corrected. It aslo suggests that investors and the public were duped because there were no projects undertaken to match the ‘project loans’.]

  16. livinginbarbados Avatar
    livinginbarbados

    The way that financial accounts work at the national level is that every thing has to add up at least in flow terms; getting stocks right may be tricky if the start point is not right.

    So, if government misrecords then for things to add up, another sector (domestic banking system, domestic private sector, and/or foreign sector) needs to adjust for this. It’s easier for the official sector to square things between itself (eg government/public corporations and central bank). It’s hard to get the private sector (enterprises or persons) to mess up their accounts, and foreigners are no less problematic. The easiest ‘cheat’ is to lump the misrecording into some ‘unidentified/other’ category.

  17. David Avatar
    David

    You are saying the government’s banker ie Central Bank has no oversight?

  18. livinginbarbados Avatar
    livinginbarbados

    The central bank does not oversee the government; that’s Parliament’s job (see the AG’s report: Public Accounts Committee, etc.),and for the electorate.

  19. Hal Austin Avatar
    Hal Austin

    Ha ha

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