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Trap foreign currency

marciadottin, marciadottin@nationnews.com

Added 16 January 2014

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“The Central Bank of Barbados protects the value of the currency . . . . To do so convincingly, the bank must at all times maintain an adequate level of foreign reserves.” – Dr Delisle Worrell, Governor of the Central Bank of Barbados. “The more reserves fall, the harder it is for the Central Bank to defend the current peg [to the US dollar].” – Aaron Freedman, Moody’s analyst. While prominent analysts make pronouncements about Barbados’ foreign reserves, the economy is haemorrhaging potential foreign exchange like crazy. It is an open secret that there is a vibrant foreign currency trade taking place in Barbados at the expense of the measures put in place by the Government of Barbados to ensure that the country earns foreign exchange. Taxi drivers, vendors and small shops on the island earn much needed foreign currency from our tourism product but it is circulated and traded among friends and other locals, and leaves the island by clandestine means. Vacationing overseas Barbadians bring in much foreign currency but this, too, is offloaded among friends. There are many who boast of earning foreign exchange for the country, not realizing that foreign currency is not necessarily foreign exchange. The onus must be on Government to ensure that more of the foreign currency entering Barbados reaches the Central Bank. I wish that someone could tell me how much of the foreign currency earned in Oistins on Friday nights reaches the Central Bank! Last year, Grenville Phillips Jr made some suggestions about how Government could capture more of the foreign currency that is brought to Barbados. My suggestion is for Government to make an effort to capture some of this free flow foreign currency by offering discounts to residents who settle their Government bills (land tax, road tax, licence fees, water bills, among others) with foreign currency. The United States dollar is already legal tender in Barbados. We need to think outside the box.  

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