NOTES FROM THE economic frontline: Item: Foreign exchange reserves falling, but because of its deep-south credit rating, Barbados can’t afford to borrow on the international markets to shore up reserves . . . . Central Bank warns country of impending forex disaster stating “Foreign exchange outflows will be tightened by the measures to be announced in the forthcoming budget” in half-year report . . . .
Item: Dolittle’s finance guru responds with symbolic slap in the face, stating “This government sees no reason for the introduction of any special measures to limit Barbadians and/or businesses from accessing foreign exchange in Barbados” during budget speech . . .
Item: Central Bank governor knows better than to respond . . . . Even Owen-Who’s-Goin’ weighs in on the matter, actually telling fellow MPs not to vote to approve budget measures unless finance guru agrees to stop printing local currency . . .
Reporting from the economic front line is exhausting, my friends.
Well, it all finally came to a head, at least in principle, last week, when Minister of Finance Chris Sinckler threw in the towel, and essentially admitted that the Barbados dollar is facing the abyss. OK, he didn’t say that, but by announcing his agreement to duty-free shopping being extended to Bajans With Foreign Exchange (BWFEs), he has officially agreed to making Barbados a multiple currency country.
Well, you say, Barbadians have always been able to get foreign exchange. To which I say, it used to be a lot harder. And it’s true that you will never hear any establishment to which you are offering payment in a hard currency say, “Sorry, but we only accept the Bajan dollar as legal tender. You need to go to the bank and exchange those greenbacks for Grantleys.”
But even if no policeman will ever arrest you or any tourist for spending foreign currency here, it is still illegal. That is why the sanctioning of duty- free shopping for BWFEs by the actual ultimate financial authority (aka the government) is a really big thing.
So desperate is the “dolittle” administration for forex that it has now as much as admitted it is losing the battle to maintain its currency peg by approving the idea of citizens taking their hard currency out from under the bed and spending it here instead of Miami or New York while on vacation.
I predict this thing is going to get a whole lot bigger than it may seem right now, and I think Mr Sinckler knows it. To date, the massive duties imposed on the so-called “luxury” lines have had the effect of making us refugees from the quality standards other countries’ citizens take for granted, unless we shop for our clothes, shoes, belts perfumes, watches colognes and jewellery abroad.
We are entering a whole new paradigm for Barbados’ financial system, which was originally based on the Barbadian dollar being at the apex of the financial food chain, with all other currencies being officially illegal tender for over-the-counter transactions.
It is ironic that demise of this system, seen as a prerequisite for independence, should be proclaimed even as those whose bad policies led to its essential irrelevance are quite busily leading the celebrations of our 50th year of independence.
Patrick Hoyos is a journalist and publisher specialising in business. Email: pathoyos@gmail.com
