Sovereignty cum foreign earnings
The recent comment by Barbados Central Bank Governor Dr DeLisle Worrell that our level of foreign reserves gives us the freedom not to bow to the advice of the International Monetary Fund (IMF) about how we should manage our economy is very comforting news.
As the Governor reminded us: “The IMF is not in a position to tell us anything. That is the beauty of having foreign reserves.”
This news reaches us as we enter into annual Independence celebrations, and its significance is that it assures us that the Barbadian economy is being managed from Bridgetown and not from Washington, London, Japan, China, or anywhere else.
Without this build-up of such reserves over time, we would now be at the mercy and dictates of an organization which one local politician once said behaves like “international writ servers”.
The relatively comfortable level of the reserves also allows us to better understand what political independence means, for the Governor is right to remind us, as we approach the holiday spending season, that the major problem in early 1991 was that Prime Minister Erskine Sandiford’s administration found itself without foreign reserves and had to go to the IMF. We accepted much, but not the most draconian advice – to devalue – which we were then given.
The Governor has informed us further that unless the country earns more foreign exchange, the policies to depress public spending will have to continue in order to protect the entire economy.
We anticipate that the raging debate on various economic issues will continue during this season, but it is clear common ground now between the two major political parties that the level of foreign reserves and the need to keep on earning more foreign currency than we spend are a key element of whatever economic policies either party chooses to propound.
We are not surprised at Dr Worrell’s statement; for the bank’s first Governor, Sir Courtney Blackman, has been stressing the need for us to earn foreign currency for decades.
In a lecture last year, he said: “It would be humiliating if we had to cede our sovereignty to international creditors or financial institutions through failure to husband our foreign reserves – as indeed near befell us in 1991 when the IMF was demanding an eight per cent cut in public service wages and the layoff of 2 000 civil servants.”
It would indeed, and that is why Dr Worrell’s comments are reassuring; but it is equally important that steps be taken to shake up and stimulate those economic sectors that earn foreign exchange.
The creation of an international financial sector was designed to help us earn foreign exchange, and to date we have successfully used that vehicle to improve our earning capacity; and together with tourism and other services we have seen the value of the sector even in the face of a turbulent international landscape.
It is therefore nationally important that we continue to monitor changes in that sector and quickly amend our legislation so we can maximize the potential of this fast moving industry.
It would also help the sector if in addition to desirably quicker service, the long mooted international arbitration centre could come to fruition. We have lost the unique position of having the first such centre away from the London base of the organization which is dedicated to the business of arbitration of disputes between companies.
Yet, we ought now to agitate ourselves and get on with the job of getting such a centre located within our island. The task of earning foreign exchange is “round-the-clock activity”, and given the importance of it to our national well-being, we must use every opportunity to maximize such earnings.