Foreign Reserves Continue to Fall

Barbados foreign exchange reserves at June 2017

It is the silly season and if we are to judge from debates of the past leading up to a general election, it is unlikely such an important issue will take place devoid of political claptrap. All indicators about the health of the foreign reserves confirm that this government has been unable to change the downward trend. At his last utterance the minister of finance confirmed that Barbados’ foreign reserves are holding at 8 weeks of import cover.

It feels like déjà vu to some of us who experienced the period of the early 90s presided over by Erskine Sandiford. There was flight of foreign exchange and pleas had to be made by the government to the Barbados Mutual Assurance Society and other companies that enjoyed permission to invest a percentage of pension funds overseas to assist the country by transferring to the Central Bank of Barbados. While addressing an ICAB session this week minister of finance Chris Sinckler issued a similar plea to the private sector- to return forex to the country to bolster the foreign reserves. Was there a hint of distrust to be gleaned from the minister’s tone that the private sector is hoarding forex?

Another interesting observation arising from the minister’s address was the obvious impatience directed at the Commissioners of the Fair Trade Commission as it relates to the pending application for the sale of BNTC to Simpsons Oil. It is unusual for a minister of finance to be blatantly critical of a regulator. What if minister of commerce Donville Inniss were to criticize the Central Bank for example?  Surely the minister of finance- given his lofty position in government- should be aware of the reason why the FTC decision is pending? Is this an attempt to intimidate the Commissioners of the FTC? An element of desperation perhaps?

The greater concern about the depleted foreign reserves is not that Sinckler hinted that the government can compulsorily acquire forex held by commercial banks if the forex situation continue to deteriorate. We can only speculate what the principals of the Canadian banks are plotting in reaction to the recent decision by the Central Bank of Barbados to increase the reserve requirement and now the veil threat by the minister of finance to access forex held by commercial banks. BU cannot find a single case where a so called third world country intimidated an international bank.

What minister Sinckler and the government must appreciate is that the current state and his mouthing will not inspire confidence in the market. In fact, it is clear the private sector has lost confidence in the government. One only has to listen to head of the Barbados Private Sector Association Charles Herbert who represents that sector. One has to listen to Eddie Abed who represents the Barbados Chamber of Commerce. One has to listen to Dean Straker who is head of the Barbados Small Business Association. This is not an exhaustive list.

If we analyze the graph there is the obvious conclusion to be made that the government has been unable to implement policies to earn adequate amounts of foreign exchange. The policy of selling the family silver- analogous to when another DLP government in the 90s sold C&W shares- is not sustainable. If the FTC approves the BNTCL deal all it does is to kick the foreign exchange can down the road. There is a hole in the bucket dear Lila, dear Lila.


Is Governor Delisle Worrell Preparing Barbadians for a Contraction in the International Reserves?

The Governor of the Central Bank Delisle Worrell posted a full colour page in today’s media titled “More Foreign Reserves are not Necessarily Better”, the thesis of which is,  “Countries should maintain foreign exchange reserves sufficient to allow time to adjust to the vagaries of international markets, so that banks and traders do not become apprehensive about the value of the currency”.

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Cash Strapped Caribbean Governments Selling Citizenships

Submitted by Mahogany Coconut Think Tank and Watchdog Group
Citizenship a commodity

Citizenship a commodity

As the economic crisis lengthens, Caribbean governments strapped for foreign exchange and foreign investments have decided to sell citizenship in order to plug holes within their economies. We have already stated that we are being drawn into a whirlpool of global proportions that may very well, forever, change the image and direction of our island states.

There are those who will argue and quite correctly that bigger and more economically powerful countries, including the United States of America, are already involved in such activity. Once again we are forced to ask: Why are we following others?

Many of our people, who live in the Diaspora, have given up on returning home because of what they consider to be the high cost of living. While we do not support such positions, we are fully aware that those who have planted roots in other countries have many factors to consider when contemplating a return to our island states.

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Generating and Protecting Our Forex

Barbados forex fell by 63 million dollars

It is unfortunate that when some of us try to engage in a constructive debate about the economy, motivated only by love of country, others trivialize the attempt because they are blinded by party colours.

BU continues to be disappointed that despite the protracted volatility of the global economy, it seems to be having a null effect on the mindset of Barbadians and the political directorate. Instead of reconciling to a position to what we can do for our country, we continue to demand, demand, demand, more, more, more. Years and years of becoming bloated as a result of borrowing has caught up with us.

The time has come to select a new path. The aged model which has served us well must be dispensed with if we are to sustain our current way of life. Yes this government is to be commended for the increased dialogue about Renewable Energy (RE), and those policy initiatives which seek to wean Barbadians from its almost total dependence on fossil fuel. BU suggests that we have not done enough.  Why can’t motor dealers be incentivised to sell Hybrid vehicles NOW? Why can’t taxpayers get a 2-3 year shelter up to 80% on tax filings when they retrofit their homes with RE devices NOW? We need to take significant decisions to kickstart desired behaviours. We give RE incentives yet facilitate the increase of vehicles which run on fossil fuel.

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