Worry over foreign reserves continues

CONCERN STILL EXISTS about Barbados’ level of foreign reserves.

It is coming from Royal Bank of Canada (RBC) group economist Marla Dukharan, who said in her latest analysis of Caribbean economies that the foreign reserves level was the key economic statistic to monitor in the coming months.

“We have been seeing the lowest level of foreign reserves since January 2000. This also represents the 21st consecutive month of declining reserves, suggesting that the underlying problem is not temporary in nature,” she pointed out.

According to Dukharan: “The level of reserves has been below the internationally accepted precautionary benchmark of three months since April 2016. In 2016, when reserves were higher, the International Monetary Fund reported that reserves are significantly lower than the estimated threshold using metrics that take into account capital flight-related risks when capital controls are ineffective – given the level required to cover broad money; and also below comfortable levels for small open economies with high debt and fixed-exchange rate regimes.” (GE)

Please read the full story in today’s Sunday Sun, or in the eNATION edition.