Barbados’ foreign reserves have dropped by more than $70 million in the last 12 days, claims Opposition Leader Mia Mottley.
She said they now stood at less than $340 million – about four and a half weeks of imports.
Mottley told the DAILY NATION last night the low levels of the reserves, their dramatic rate of decline and the absence of a plan to immediately stop the drop must be the priority for Government.
“The situation is now dire; it cannot be business as usual,” she said. “What is of equal concern is that when you add the figure in the External Sinking Fund of $310 million to the $177 million equivalent of SDRs (special drawing rights), this total is more than the acknowledged international reserves.
“This is not possible as it would mean that either the External Sinking Fund [which must be kept by law to repay foreign debt] has been depleted, or the figure stated for the SDRs is wrong. The net international reserves cannot be less than the total of those two sums.”
Mottley said the Estimates Debate, which started yesterday, did not address the most critical problem Barbados faced, which was the level of the international reserves.
“That was the first of the eight questions I posed to the Minister of Finance last week. Our reserves are the lowest since the early 1990s when we had similar difficulties, but this time it is both reserves and debt, together with anaemic growth that is bedevilling the country – and for almost a decade.
“The Government does not need a plan; it needs to act,” said Mottley.
When contacted for a response, Central Bank Governor Cleviston Haynes said he preferred not to comment on the phone and asked for the questions to be emailed.
He responded through his public affairs officer Novaline Brewster, saying: “As a matter of policy, the bank does not report on the reserves on a daily basis.”
News of this drop in reserves came the day after the Barbados Bankers’ Association urged the Freundel Stuart administration to take immediate decisive action to preserve the BDS$2 to US$1 exchange rate and increase the foreign exchange reserves.
President Donna Wellington said over the weekend: “We are concerned that on the current trajectory, the Central Bank will be unable to defend the currency peg and the Barbados dollar will devalue if nothing is done to stop the decline. We are not at that stage yet, but we will get there if nothing is done to correct the current issues.”
Just 14 days ago when Haynes reviewed Barbados’ 2017 economic performance, he did express concern for the level of reserves and their trajectory.
However, he added that “it does not require panic. It requires us to address the issues which confront us, to do so frontily and . . . quickly”.
A source in the financial services sector said last night the island’s foreign reserves fluctuated according to the payment schedules that must be met, but efforts were always made to keep them at an appropriate level. (SP)
