On the sentimental side, Dr Kevin Greenidge as an ambitious young economist took on a career path and educational training that would have led him to pursue his goal of being elected governor of the central bank of Barbaods. Congratulations to him on achieving his boyhood personal & professional ambition. However, let’s move the conversation past sentiments.
On the Barbados side Dr Kevin Greenidge has been actively involved in providing advice and instruction in respect to the daily management operations of the Central bank of Barbados as just an IMF consultant. The freedom of the central bank to pursue it’s independent agenda has come under scrutiny from the IMF as a need to be more fiscally responsible and free from the government’s budget cycle.
Barbados’ government faces a shortfall in finances, it will not have the use of the central bank’s facilities to bail out the government. Dr. Greenidge’s hallmark will be his role in operating under a new central bank law aimed at cutting the tentacles of the Minister of Finance , cutting his/ her power to hire and fire the governor and allowing the bank to operate on a purely fiscal nature.
The Central Bank of Barbados saw some changes under the current IMF BERT plan in respect to the Central Bank of Barbados Act 2020 which limits the printing of money and additional government guarantees to central government. The CBB is currently undergoing an IMF technical assistant plan to recapitalize the bank’s balance sheet after the bank lost $1.6 B in revenue from the government’s debt restructuring. The debt restructuring was advised by Dr Greenidge. It is public knowledge that any country that defaulted on it’s foreign debts and entered into IMF programs eventually devalue their currency
One must ask if Dr. Kevin Greenidge’s position on the external devaluation of the Barbados dollar is consistent with the IMF. While speaking to Lisa Lorde on CBC TV Dr Greenidge said that in IMF negotiations the external devaluation of the BDS dollars is always on the table. Barbados’ foreign debt ratio has increased from 26% at 2018 to 46 % in 2023. A current account deficit of $1B per year in foreign income for 2 consecutive years. With our foreign income earners dwindling, what will Barbados do to unlock streams of foreign income?
“Dr Kevin Greenidge a Barbadian born IMF trained economist who has been seconded from the IMF to be technical advisor to the government of Barbados, is now governor of the Central bank of Barbados. He has the opportunity to prove if he is a friend or foe of Barbados.”
The IMF official holds a view that the 2:1 currency peg needs to be softened or devalued in order for Barbados to attract substantial foreign direct investment/income. The strategic strength of the BDS dollar has been eroded by the lack of growth in local economy and increases in foreign debt, an inability of the Barbados market to generate safe returns and increases in foreign income, the debt restructuring and debt default has impacted the local foreign owned banking system with loses which has destroyed confidence with investors. The Authorised foreign currency Dealers in Barbados are The Bank of Nova Scotia, CIBC First Caribbean, Citicorp Merchant Bank, Consolidated Finance, First Citizens Bank, RBC Royal Bank, Republic Bank, and SigniaGlobe Financial Group.
All attempts by the CBB at raising money on the local investment market failed to meet the required threshold. The brainchild of Dr. Kevin Greenidge, which is the BOSS program, both BOSS 1 and BOSS 2.0 failed to raised the required funds. Barbados also continues to be barred from international capital markets because of the decision to default on foreign debt to the tune of $980M. The changing of Canadian exempt surplus arrangement to countries with a weaker peg and less taxes continues to impact foreign income.
As Greenidge takes on the job , SOE and pension reform still looms. These two big ticket items will see cuts across all social programs of government as external debt continues to rise with further drawdowns from the IMF. Some things are more evident than some as Barbados cannot maintain the current levels of foreign reserves without further foreign borrowing as it is extra ordinary for a country the size of Barbados to maintain the levels in borrowing of foreign reserves without a trade surplus policy in order to earn foreign exchange to pay debt and interest to the IMF and other creditors. The debt trap has kicked in.
In 2019, Barbados implemented a policy called foreign exchange liberalization to r Barbados to allow authorised dealers to execute larger foreign currency transactions with the average Barbadian being allowed to have a foreign account up to $10K. This sounds attractive however foreign account liberalization in small economies with indigenous currency all tend to devalue their currency in order to attract US investment for e.g the mexican peso. Therefore Dr Kevin Greenidge has an opportunity to show his loyalty either to country or organization.