Dr. Honohan’s Visit to Barbados

Former Governor of the Central Bank of Ireland, Dr. Patrick Honohan

The following Barbados Advocate editorial is reproduced to facilitate discussion on the highly publicised visit to Barbados by Dr. Honohan, former Governor of the central bank of Ireland – Barbados Underground


Mon, 04/03/2017 – 12:00am Barbados

IN the presentation he made last Thursday evening at the Grande Salle of the Tom Adams Financial Centre, economist Dr. Patrick Honohan added his voice to the debate as to whether devaluation does work for countries which have entered relationships with the International Monetary Fund (IMF).

While not indicating what countries should or should not when it comes to this policy, and speaking broadly, the Distinguished Fellow indicated that very often subsequent devaluations follow after the first devaluation, and results in countries being right back where they started.

In other words, there are no benefits to having their exchange rate adjusted. It is one of the things that we in Barbados have seen happened to some of our neighbours who go the devaluation route, while trying to correct problems in their economy.

In Barbados and over the last two years or so, devaluation has been discussed repeatedly as a tool the present government ought to use to help the country out of the economic misfortune that it finds itself. The response by both the Government and the Central Bank of Barbados is that changing the exchange rate – which has been in place since the 1970s – will not be done since the existing rate has worked well for the country and there is no need to tamper with it.

However, the debate has intensified since the country continues to see a decline in its net international reserves. Those reserves fell from over one billion dollars to just under $700 million by the end of last year. A country, it is said, requires a comfortable stock of reserves to defend the existing exchange rate, finance foreign debt repayments, pay for imports and to meet the requirements of Barbadians travelling abroad.

It must also be added that over the years countries entering Standby Arrangements with the Fund have been influenced into using the devaluation or currency adjustment tool to make their economies more competitive. In adjusting the exchange rate, therefore, they do so with the understanding that their exports will be cheaper than the rest of the world while their imports will be more expensive.

However, the problem with this line of thinking is that domestic producers require imported inputs for their business operations. Therefore, if inputs are going to cost more since they are imported inputs, then that means the final goods will cost more to produce and therefore, defeat the decision to have the devaluation. Another point worth arguing on the subject is that small countries do not produce a wide range of goods and services which can be substituted for the higher priced imports.

Dr. Honohan said that once the policy has not worked, overspending by a government tends to resurface. To date it is known that fiscal policy has been used to curtail spending, especially on imports. To date it has worked and Barbados will have to pursue this policy in addition to others, such as stimulating the export sectors, so as to both earn and safeguard foreign exchange.

The 2017 first quarter review period for the economy has just ended and soon the country will be hearing from the Central Bank on what transpired during the period January to March. The country is anxious to hear what has happened since December last year.


  • Anxious to hear what happened for the 1st quarter? FOREX have fallen below US$300M.


  • In other words in June/July: devaluation and all the other outfall known from Jamaica and Guyana by June/July.

    The Greece-solution (higher taxes + NO structural reforms) does not work. Neither in Europe nor in the Caribbean.


  • CUP.Violet Beckles Plantation Deeds from 1926-2017 land tax bills and no Deeds,BLPand DLP Massive land Fruad and PONZI

    They know the numbers already for the end of last year, the people are always the last to know, If the reports are bad, will they another downgrade ? or did we have a downgrade because other already know,? More PAIN to come, Land Fraud , Bank Fraud , History Fraud DLP Fraud, BLP Fraud , DBLP Fraud, Lawyer Fraud Minister Fraud, High Court Fraud, Police Fraud, DPP Fraud AG Fraud, Sir= Fraud, still being covered up , No Clear Title for land to get loans from Bajan banks holding more than 24 Billion.


  • I saw a fat new white BMW X5 yesterday with a holder for number plate, printed “Toronto” on it. The tickets and containers to Canada are already booked. The enslaved masses stay behind, ready to pay off billions and billions of debts the next 200 years.


  • Dr. Patrick Honohan added his voice to the debate as to whether devaluation does work for countries which have entered relationships with the International Monetary Fund (IMF).
    All economists (whatever the hell those are) seem to be blind brass bowls….
    How else does one explain this retarded adherence to stupid logic that worked only for a brief period during the cold war inflationary period of the late 20th century?

    Shiite man!!
    EVERYONE knows that devaluation does not work …. bla bla bla…

    Devaluation is not a strategic proactive choice facing Barbados. It is the INEVITABLE consequence of doing shiite for YEARS on end…. the collision with the fan.

    Bushie is SICK and TIRED of these people with the lotta talk about it “not being in our interest” …. as if that is the determining factor….
    People DO NOT become homeless BUMS and street characters because it is “in their interest” … but as a RESULT of negative occurrences in their lives.

    What a brass bowl sows, so shall he reap….. One does not reap produce on the basis that ‘it is good for you’, …but on the basis that it is what you planted.

    What lackies like Honohan WOULD be telling Barbados (if he was being honest instead of looking to be polite) is that what is surprising is that our asses have not been devalued long ago – given the depth of shiite being accumulated here in this small place…

    After CLICO, we lost all hints of any real national value, and then, when the Speaker of the HOA was found to be a thief by the court – AND REMAINED in that (Dis)honourable house, we reached shiite value…..

    Time we faced the music…. we have been devalued for some time now. The financials are just playing lag…


  • @Bush Tea

    Just posted a similar comment on Facebook. Devaluation is a consequence of bad management, it is not a solution.


  • The longer the establishment delays the inevitable, the more likely we get a sliding currency like Jamaica or Guyana, not a new lower, stable peg.


  • Honohan is just earning a living on the shite talk ( speaking engagements and lecture )


    Our GOB should have resigned and done the same instead of waiting to be fired.


  • Well Well & Consequences Observing Blogger

    Bushman…as I said on another link, the industrialized countries have had centuries to perfect their deceptive practices, small island governments have been stumbling around in their economic minefields like drunken, addicted to spending sailors, for the last 50 years, totally intellectually unequipped to compete with those who have had a 500 year head start in economic chicanery, they will never catch up, not with those backward, small island mentalities soaked and marinated in centuries old bullshit and the recent bribery and corruption..


  • Well Well & Consequences Observing Blogger

    You have to pay these people for their lectures and speeches on their tour circuits, how much taxpayer’s money did the idiot government pick up to pay this dude for something everyone, including small children on the island already know and what BU and other blogs have been saying fpr years, how much money was wasted on that nonsense.


  • Devaluation will come to Barbados, sooner or later and officially

    Of course, unofficial devaluation is happening every day as prices rise and wages never keeping pace.

    If they were to keep pace, the cycle of devaluation will get faster

    Barbados can’t hide much longer.


  • Well Well & Consequences Observing Blogger April 3, 2017 at 9:35 AM #

    “…….. how much taxpayer’s money did the idiot government pick up to pay this dude for something everyone, including small children on the island already know and what BU and other blogs have been saying for years, how much money was wasted on that nonsense.”

    @ WW&C

    Good question!!!

    But surely you should understand the objectives this inept DLP administration are hoping to achieve having brought Honohan to gives his perspective on the Barbadian economy.

    Firstly, Honohan’s views of the Barbados economy is in line with government’s political agenda, since he is regurgitating the type of economic jargon they want to hear at this time.

    Secondly, by constantly advertising Honohan’s credentials, while emphasizing he is the former Governor of Ireland’s Central Bank, this administration is essentially implying he is much more qualified to assess Barbados’ economic situation than our local and regional economists, and EVEN MORE SO than former CBB Governor Dr. Delisle Worrell. Which brings any reasonable person to assume Honohan’s lecture will be used, in part, to justify Dr. Worrell’s “sacking.”

    Thirdly, as stated by PM Stuart, since Barbados is not about to embark on an “orgy” of long or short term borrowing from the “capital markets,” the 19 consecutive credit rating downgrades are meaningless. Hence, his referral to Moody’s Ba3 to B3 downgrade in June 2014 as trash, re his comment: “what they say has as much value as what you would see in any garbage dump collected by the Sanitation Services Authority.”

    Yet, Stuart is asking Barbadians to accept Honohan’s assessments, and dismiss those of the IMF, Standard & Poor’s, Moody’s, CDB, the regional and international economists.


  • fortyacresandamule

    Devaluation, IF it comes, will be a result of market forces and not a policy prescription. I say IF, because I have be hearing about our low NIR for years together with the prediction of an inevitable weaken currency yet to date the currency peg still stands firm. Something is amiss. Why don’t we see greater capital flight, hoarding, speculation, an active parallel market and a currency attack. Are Bajans investors, traders, hedgers and speculators so discipline and not risk-averse?


  • Artax,

    If they had invited the old man in the wheelchair, Hono´s and Draghi´s informal boss, he would have told them no Irish Cream. Instead he would have told them to sack at least 10,000 public servants and to stop tropical whining.


  • fortyacresandamule

    @Artaxes. Nowadays, credit rating agencies only drive fear in emerging nations bond market. On the other hand, they have lost credibility with developed market investors. The world is not fair, so Barbados should be worried about the roll- over risk when it’s international bonds reach maturity.


  • David,

    Devaluation is a temporary measure.
    By the way, who invited the good doctor to Barbados? Who paid his expenses? Which airline did he fly by? Did he stay at Sandy Lane?


  • fortyacresandamule,

    Since the BBD is not much traded outside Barbados, there is little room for currency attack.

    The shadow market is already very active. Many Barbadians have bank accounts and credit cards from Canada, USA, GB and Switzerland, recharged from foreign sources, many transactions in the service industry take place from offshore account to offshore account. Of course, nobody talks about that for good reason.

    Also: The internal devaluation has reached a point that consumer prices in Barbados are higher than Norway or Switzerland. And at the same time, the average wage is 90% lower than in said countries.


  • fortyacresandamule April 3, 2017 at 10:47 AM #

    “The world is not fair, so Barbados should be worried about the roll- over risk when it’s international bonds reach maturity.”

    @ fortyacres

    Dr. Worrell highlighted that risk on page 3 of the Central Bank’s June 2016 press release, when he commented on the high deficit and the risk premium:

    Government’s financing needs since 2008 have been the main reason for the widening of the gap between the US and Barbadian three-month Treasury bill rates. When the Central Bank REMOVED the MINIMUM DEPOSIT INTEREST RATE STIPULATION in April 2015 an attempt was made to NARROW THIS GAP and REDUCE the Barbados RISK PREMIUM, through intervention at the Treasury bill auction. However, because of Government’s cash flow needs, the minor rate reductions achieved could not be sustained. Since April 2015, commercial banks have lowered their deposit rates more substantially than their loan rates. As a result, the average interest margin has widened by 0.5 of a percentage point.”


  • Well Well & Consequences Observing Blogger

    Art……the government with their trifling, petty slave mentality simply believe that bajans would be in such awe, like they are, of this Irish dude that after listening to the crap he spews and which everyone already knows, the electorate would be dumb enough to rush out and vote back in this band of incompetent, neglectful, disrespectful, lying, deceitful jackasses for ministers, to make their economic situation even worse than they have made it in 9 years.

    Ah bet you they think the Irish dude dont know it’s government incompetence and inaction, their do nothing mentality caused the economic mess, but he got paid, so what does he care.


  • fortyacresandamule

    @Tron. The currency attack situation I alluded to, you are correct in your assessment. However, I have seen Goldman Sac tried to attack the Jamaican dollar (even though it is a floating) by borrowing heavily in jamaican $ currency and convert the said currency in US$.

    When you say ”many Bajans” have foreign accounts and access to US$ credit card, you are certainly not talking about the ordinary bajans who make up the mass of the population. Really! Bim is more expensive than Norway. What’s the price for a big Mac? What’s the inflation rate in Barbados vs the Eu and the USA?


  • Still waiting to hear who invited the good doctor, how much was he paid, where did he stay and which airline did he arrive by?


  • @Hal

    Obviously he was invited by the Central Bank as is the practice of the Central Banks who take the opportunity to share information across boundaries.


  • BEHIND THE HEADLINES: It’s all about management

    TONY BEST, Added 31 March 2017



    After the golden jubilee celebrations that marked 50 years of independence from Britain in 1966, Barbadians should have been thinking of years of prosperity ahead of them. The economy should be moving at a reasonable clip and the social environment making Bajans proud.

    With the global economy picking up more steam after years of anemic growth, Barbados should have been on course to benefit from at least three per cent expansion. After all, when the worldwide economy tanked in 2007 and 2008, Barbados’ hit rock bottom. So the reverse should now be a fact of life.

    But that’s not the case.

    Economic growth hasn’t recovered, debts have piled up so much so that they are now 111 per cent of gross domestic product, one of the world’s highest; the deficit remains stubbornly high, about eight per cent; garbage collection is a problem; turmoil hit the central bank and the law courts had to settle the dispute between the Minister of Finance Chris Sinckler and Dr DeLisle Worrell, the former Governor; Wall Street credit ratings were downgraded again by Standard & Poor’s and Moody’s Investors Service; foreign reserves have plummeted; the water supply, once a source of pride, has become unreliable; potholes are the scourge of our road network; the country owes the University of the West Indies $200 million and can’t or wouldn’t pay; questions arose about the long-term viability of the National Insurance Scheme; Sinckler felt compelled to use the House of Assembly to appeal to the private sector to bring back some of the foreign exchange stored abroad; and the bus transportation system has gone from bad to worse.

    They are but a few of the nightmares the country endures.

    How come this dramatic fall from grace for a country that was once heralded as the “best run black country in the world”?

    Sir Courtney Blackman, a former Central Bank Governor, who remains buoyant about his birthplace’s fortunes, even in the face of such obvious serious setbacks, thinks the answer is straightforward.

    “It’s all about the management of our resources, human, financial and otherwise,” was the way he put it a few days ago to BARBADOS BUSINESS AUTHORITY after the House ended its debate on the 2017-2018 Estimates. “When so many things go wrong at the same time, the answer usually revolves around management. In this case, it is a problem of management.”

    In his well-written book, The Practice Of Economic Management, A Caribbean Perspective,” Sir Courtney, who went on to become Barbados’ top diplomat in Washington, said “management must be made accountable for results”.

    Nowhere is that standard of measurement more relevant than with the more than 60 state enterprises which the government has been vowing to rationalise for years but hasn’t gotten around to holding them accountable for the hundreds of millions of taxpayer money poured into them.

    The absence of audited accounts of so many statutory corporations, some going back many years, is symptomatic of the appalling situation, a telltale sign of gross inefficiency, a lack of planning and galloping waste.

    “The failure of state-owned enterprises to submit audited financial accounts for years on end is scandalous,” Sir Courtney said, not simply about the agencies in Barbados but across the Caribbean. Of course, any report card on the operations of state enterprises must begin with the role of the cabinet ministers responsible for them.

    Owen Arthur, who led the country for almost 15 years ending in 2008, put his finger on a major contributor to the problem of state enterprises when he said recently in New York that Barbados simply has too many of them.

    “We don’t need so many,” Arthur told BARBADOS BUSINESS AUTHORITY during a visit to Manhattan where he delivered the keynote address at a symposium sponsored recently by the State University of New York – University of the West Indies Centre. Caribbean economic experts focused attention on the correspondent banking crisis having over the Caribbean like the sword of Damocles.

    The axis of the state enterprises problem is ministerial control and lack of accountability. Clearly, it’s not with the model itself. Instead, it is how we are abusing it. Introduced more than 70 years ago to bypass government red tape and speed up decision making, most corporations have become centres of political patronage.

    Successive governments have known for decades that far too many of them don’t produce any measurable results but they still feast on public funds.

    Next is a failure of ministers to recognise their roles. Instead of outlining goals and establishing parameters for the enterprises while choosing competent managers, the politicians incorrectly set out to become surrogate chief executive officers (CEOs).

    “The role of ministers is clear,” insists Sir Courtney. “It is to set goals, select managers on the basis of their capacity to carry out the required task, establish performance criteria; insist on timely reporting, especially of financial results, punish and remove, if necessary, managers who do not perform.”

    Unfortunately that’s not the road on which the corporations travel. In its assessment of the island’s performance, S&P seemingly went out of its way to pinpoint state enterprises and their problems when it complained that the government’s “streamlining of state-owned enterprise financing was behind schedule, and their management continues to weigh on Barbados’ fiscal profile.” In other words, many of them are an albatross around the government’s neck. Until we do something about it, the mess will continue.

    The root of their problems isn’t the CEOs. It is the political directorate.

    “I believe Barbados is one of the best educated countries in the world. It has three secrets – education, education, education,” argued Sir Courtney.

    “That’s why I don’t worry too much about Barbados’ future. But we have to pay more attention to our management discipline. Our democratic system of governance puts the authority to correct things in the hands of the voters who will have an opportunity to act at the next election. Naturally, I am saddened by recent developments. Things just haven’t gone well. Still, I am not afraid of the future.”


  • Barbados………a nation of educated idiots.


  • Sorry Bushie….. educated “brassbowls”


  • David,
    Instead of guessing a quick call to the central bank’s press office may get the answers.


  • @Hal

    Who is guessing?

    Did you watch the video posted in BU’s comment?


  • Yes. There is a reason I asked where he stayed and which airline he used. If that is in the interview I missed it.


  • Well Well & Consequences Observing Blogger

    “The role of ministers is clear,” insists Sir Courtney. “It is to set goals, select managers on the basis of their capacity to carry out the required task, establish performance criteria; insist on timely reporting, especially of financial results, punish and remove, if necessary, managers who do not perform.”

    The government ministers fail to understand their job descriptions, once elected they are only interested in yardfowl gathering at the statutory corporations funded by taxpayers, controling the managers of these entities and every aspect of every entity and hiring those who do not have the requiste skills and experience to head them, they hire based dolely on political allegiances, not qualifications and despite having no clue about the job descripion……

    ……the ministers then spend the remainder of their terms pimping for minorities, giving them free access to taxpayer’s money and practicing their incompetence while filling up their own pockets through every conceivable scheme and scam perpetrated by these minorities against the majority. ..that is what ruined Barbados. ..square pegs in round holes….has the island all but destroyed.


  • He also said the following:-

    Rather, the former governor of the Central Bank of Ireland, Dr Patrick Honohan, said early action and a clear, coherent plan would be key to navigating any economic and banking crisis, and staving off further hikes in interest on rising debt.

    While the Distinguished Visiting Fellow told the 4th Caribbean Economic Forum hosted by the Central Bank of Barbados on Thursday that the task would not be easy, he was adamant that politicians have a duty to properly communicate their plan of action to citizens. (WILLCOMM)
    – See more at: http://www.nationnews.com/nationnews/news/95215/action-urges-honohan#sthash.gDaOz6cZ.dpuf

    None of which this govt is doing and one must remember that this invitation was done under the watch of the then GoCB Worrel.


  • fortyacresandamule

    I always cringed whenever I hear politicians claiming ” Barbados is the best run black country in the world”. Our standards are really low if we believe that nonsense. The Bahamas could also make the same claim. The best run black country in the world in terms of economic growth and fiscal discipline is Botswana.


  • @fortyacresandamule

    What about if you went with so called HDI as the measure?


  • The decision caused the rand to plummet.
    S&P has officially downgraded South Africa’s credit rating to junk
    Jacob Zuma’s purging of his cabinet has led rand to fall and heightened uncertainty


  • When all except our Government seem wrong about the economy | Barbados Today
    When all except our Government seem wrong about the economy
    “Even with the downgrades, where we are down to ‘C’, Barbados still has the capacity to borrow . . .” – Parliamentary Secretary in the Ministry of Finance…


  • Jester Ince! Maybe the next Governor of Central Bank.


  • fortyacresandamule

    @David. The Bahamas HDI is as much high as Barbados. Plus, what is there to brag about, when the black majority own almost nothing of consequence in the economic sphere. And building a country on
    tourism and financial offshoring is not my definition of black success. With our level education, we should have had a more solid and diverse economic foundation to stand on.


  • Bimmers success was always measured by achievements overseas and the ability to build or purchase a lavish property on retirement to Bim.


  • @ Vincent Haynes,

    The vast majority of successful Bimmers stay in their adopted countries and vacation in Bim.


  • Hangs

    Agreed…..in their lavish homes.


  • @ Vincent
    …and your beef with ‘lavish homes’ is what …exactly…?


  • Bushie

    Chuckle….yuh wake up….good…

    I have no beef with lavish homes as I have lived in many……what is your point?


  • @ Vincent
    You said originally in “THEIR” lavish homes….
    You may have lived in one …but you seem huffed that folks like Hants OWNED one ..(three in his actual case 🙂 )

    We not talking bout no plantation manager’s house….
    ha ha ha


  • Tron April 3, 2017 at 6:04 PM #

    “Jester Ince! Maybe the next Governor of Central Bank.”

    @ Tron

    Surely you jest!!!


  • We need some figure to declare devaluation. Since Ince already boasted “Barbados dollar has no value”, he would be the right man for the few days between declaration and the following chaos.


  • Bush Tea April 3, 2017 at 10:08 PM #

    Chuckle…..you too love looking for an argument,where none exists……enjoy

    P.S. Never lived in a Plantation Managers house…..keep digging.


  • This comment by Charles Skeete in response to a statement made by a former politician is instructive as to why the IMF may not trust Bims govts.

    Some of the comments made here makes it sound as though we chose to go to the IMF in 1990-91. The plain truth is we had no choice. Other comments seem to suggest that the 1990-91 program was our last IMF Program. It wasn’t. Still other comments seem to suggest it was our finest our. It wasn’t. Among other things about which we should not be proud and which ultimately cost us dearly is that we took advantage of the IMF belief that we could be trusted to keep our word and that we were an ideal candidate for a less doctrinaire IMF approach. Much to the embarrassment of the IMF, we broke the agreement before the loan was fully disbursed and the Team Leader was denied her promotion. As a result, other IFIs withheld financing until there was a change of government and this prevented the program from achieving a number of its goals. The incoming government promptly amended the constitution to make a cutin wages and salaries unconstitutional.


  • Vincent,

    Barbados also broke the IMF-clause in the international syndicated Credit Suisse-loan.

    Question: Is Barbados elegible for any loan fron IMF or World Bank at all? I doubt very much.


  • Tron

    We are still paid up bona fide members of the IMF as OSA keeps repeating.

    Hence we are eligible, the fly in the ointment would be the terms,which maybe more stringent due to our track record.


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