Bury the bogeyman
IT’S NO SECRET that Government and the Opposition are at odds over the policies being pursued to rescue the Barbados economy.
Neither is it a secret that a number of regional and international financial institutions, like the International Monetary Fund, and the global rating agencies – Moody’s and Standard & Poor’s – have all looked negatively on the performance of our economy and warned that Government’s borrowing was placing the Barbados dollar under increasing pressure which could impact its peg to the United States dollar.
These critiques, together with those from local analysts, have left many a Barbadian feeling as though the sword of Damocles hangs over our heads.
Given this background, it is significant that both the Government and the Opposition have stated categorically in the last several days that devaluation of the Barbados dollar is not on the cards.
In the wake of the triple-notch downgrade by Moody’s earlier this month, Minister of Finance Chris Sinckler said, “Neither the Government nor people of Barbados want a devaluation of the Barbados dollar, and as the Government, we are determined to do what is required to maintain the fixed exchange rate and honour our financial commitments.”
Economist Dr Clyde Mascoll, a former Minister of State in the Ministry of Finance and a current Opposition Barbados Labour Party spokesman on economic matters, said Barbadians who are getting “worked up” about the possibility of a devaluation are causing themselves unnecessary worry as there is no immediate danger of this.
He said the main reason fears of devaluation were unfounded was because Barbados had adequate foreign reserves.
“If we can get the fundamentals right and do other things and get the policy prescription right, then we should not even be using the word in Barbados,” said Mascoll.
That both sides have sought to bury this bogeyman is a positive development, and should have been enough to put to rest devaluation rumours. Their persistence could be due to an apparent squeeze on foreign currency access.
Immediate past president of the Institute of Chartered Accountants of Barbados, David Simpson, claimed he has experienced this personally, as well as one or two of his clients.
While speculating that the current difficulty in obtaining foreign exchange might be a case of the Central Bank strictly applying an old policy on release of such funds, Simpson insisted the restrictions are now in place regardless of the reason and for him this suggests there is still some concern in terms of the foreign exchange reserves.
The seriousness of this issue and its implications demands the Central Bank state precisely what the position is.
As both major political entities have sought to assure the public and the world that devaluation is a non-issue for Barbados, the bank needs in the face of the difficulties Simpson cited to do its part to put this bogeyman finally to rest.