Short-term policies ‘needed adjustment’
Governor of the Central Bank of Barbados Dr DeLisle Worrell has stressed that Barbados’ long-term economic policies have not changed.
However, he said falling economic reserves required a short-term “adjustment” which had to run parallel to efforts aimed at achieving growth in the foreign exchange earning sectors.
Stressing that the economy could only grow sustainably through increased foreign exchange, he said this remained the fundamental challenge.
Worrell made the comments last Wednesday during a presentation to staff of the Insurance Corporation of Barbados on The Barbadian Economy: Challenges And Opportunities.
“Our foreign exchange inflows for the year we are now expecting to come in at about $5.25 billion. Our outflows are projected at the moment at $5.7 billion so that gives us a loss of reserves of $450 million.
“That will still leave us with about $1 billion in reserves so there is absolutely no threat to our exchange rate but we don’t want to get our reserves down [to that level],” he said.
The governor said the only way to “reliably” reduce spending on imports was to reduce total spending since everything had some import content.
“The Government has determined that we must make sufficient of an adjustment to bring the overall demand for foreign exchange back in line with what we expect . . . so that we can preserve a level of foreign exchange reserves which gives additional comfort to everyone,” he said.
However, he said growth still had to be led by tourism, international business and financial services, agriculture and agro-processing and alternative energy.
“It is absolutely incorrect to say that there is a new policy afoot and that austerity is the future of this economy. It is not.
“The future of this economy is having the determination to make ourselves competitive by upping our game, by doing the investment in the sectors that we know best,” he said.
Worrell once again reassured Barbadians that no currency devaluation was on the cards since measures would be put in place to ensure the country would not run out of foreign reserves.
“We have actually run out of reserves in Barbados and not devalued. It is the only country in the world that I know that has done that,” he added. (NB)