Over the past ten months, the Government has pulled the Barbados dollar to safety.
Prime Minister Mia Mottley made this point early in her Budget Address delivered in the House of Assembly today.
“As of today our reserves have risen from just over $400m at its lowest point early last year to $1 billion and $100 million as of yesterday”.
“In our manifesto we set ourselves a target of pulling up our reserves to 15 weeks of import cover. …We will hit that target in the next few days,” she added.
“The Government is no longer paying for its expenditures by asking the Central Bank to buy its bonds with printed money. That has ended. Because these printed dollars were not backed by foreign exchange earnings, whenever they were to pay for imports our reserves fell. We said goodbye to that insanity,” she added.
Mottley also said that in order to restrict the capacity of the Central Bank to engage in the financing of fiscal deficit in the future, Government amended two pieces of legislation - the Financial Management and Audit Act and the Central Bank Act.
“In July 2018 less than three months in government, we reduced the limit of the government’s overdraft at the Central Bank, the Ways and Means Account, to 7.5 per cent of net receipts of estimated revenue. This was down sharply from the previous ten per cent limit that did not provide the country with enough protection from the last government’s behaviour,” she added. (CM)