Fresh Central Bank warning


A financial analyst and an economist have cautioned the Central Bank of Barbados against purchasing Treasury Bills to meet Government’s revenue shortfall.

The warnings were issued this week by Carl Ross of the United States-based global financial consultant company, Grantham Mayo van Otterloo, and financial group economist at RBC Royal Bank, Marla Dukharan.

Addressing an Investor Forum at the Hilton organised by Royal Fidelity, Dukharan pointed out that the challenges facing Barbados pre-date the global recession.

“The problem is structural in Barbados because the deficit was over three per cent of GDP. Even before the crisis, debt was around 60 per cent of GDP. I think that substantiates the claim that this problem is relatively unrelated to the crisis,” she said, while noting the rapid increase in Barbados’ debt.

“The level of debt that is short term increased from nine per cent of the GDP in 2008 to 27.7 per cent of GDP [in 2013]; it tripled from 2008 to 2013.”

Dukharan, who specialises in assessing the impact of global economic trends on the Caribbean, said the debt is being  driven primarily by  Treasury Bills, which the banks and the National Insurance Scheme had taken up.

“The NIS is probably the biggest financier of the fiscal deficit, in addition to the Central Bank which buys Treasury Bills by printing money and in essence intervening in the T-bill market and keeping interest rates low.”

She added, “The IMF has heavily cautioned against the level of printing because that has a direct impact on reserves. It promotes the net outflow of US dollars via a higher import bill”.

She predicted that the island may not emerge from the ongoing recession anytime soon despite improvements to global economic conditions.

Meantime, Ross also warned of the perils of printing money to meet the administration’s financial shortfall.

“In the fixed exchange model that you have, the more the Central Bank finances the Government’s deficit, the tighter the exchange controls have to get to keep the system intact. That’s the policy trade off that the Central Bank is going to have to manage. The tighter the currency controls get, the more creative the private sector gets in figuring how to get around the currency controls,” he added.

6 Responses to Fresh Central Bank warning

  1. Santini More
    Santini More September 6, 2014 at 6:33 pm

    I really and truly believe that it is time to hit the Panic Button for this country. We have allowed a bunch of incompetent fools to sleep walk us to the edge of a precipice, and now its only a matter of moments before we step out over the edge…God help us all!

  2. Muhammad Hasan
    Muhammad Hasan September 6, 2014 at 9:22 pm


  3. Veroniva Boyce
    Veroniva Boyce September 7, 2014 at 11:00 am

    Heknows ain’t taking any advice or notice.

  4. depablo September 7, 2014 at 11:50 am

    The level of debt that is short term increased from nine per cent of the GDP in 2008 to 27.7 per cent of GDP [in 2013]; it tripled from 2008 to 2013.”

    DEMS now DEMS again. Whatever we get we deserve. Can’t expect to give idiots control of a country and expect miracles.

    Keep blaming the country’s crisis on the world recession. Keep blaming the private sector. Keep blaming de opposition. We Bajans foolish, we going to believe anything you tell us.

    It ain’t no more Lord save us. We need to help ourselves so that we can be helped.

  5. Rickie Nurse September 7, 2014 at 7:57 pm

    Depablo, you have said it as plain as you possibly can, you are 100% on the mark. This government has been warned time and again and continues to be warned about the state of affairs in this country in relation to the fiscal deficit and the printing of Treasury Bills and the impact it will have on the already decimated foreign reserves.

    The IMF has spoken, Standard & Poors has spoken, Moody has spoken, the IADB has spoken, but yet these dummies continuesd to ignore the warnings, believing that their policies and implimented measures will be the solution to us recovering from this self-inflicted crisis that we are currently in.

    Barbadians desparately need to come to the reality that this government is a complete failure of the highest level and to do hat evewr it takes and if necessary, at any cost to rid ourself of these useless government.

    there is an alternative government here in the waiting in the form of the opposition, history have proven it time and again, that whenever this DLP administration has the reign of government, we always find ourself in all kinds of predicaments and this current bunch is the ultimate worse.

  6. Andrea November 9, 2014 at 9:50 pm

    The average Barbadian does not have The ability to look at how the government is running this country; it is almost impossible with the system that exist of very little transparency into the many systems that are important in any country. Barbadians have no real say on any level on any decisions being made by this government which is not what work well here.

    We are highly educated but kept in ignorance of how and what decisions those persons we elected are making an why. A people with no real power will be lead to the slaughter as Barbados is sold from under us to every foreign interest that cares to bring “investment” dollars into Barbados.

    There are answers that are not being taken into consideration by the current government. The average Bajans issues remain security, Affordable housing/Food/transportation and Education. Most importantly Employment opportunities for a large workforce that exist but remain unemployed an now we are watching many turning to illegal mains to get ahead.

    I for one think that any minister that is running a ministry an leaves it in a negative way should be penalised an not allow to collect the hefty pension they get after 2 terms; that comment is very much aimed at the Prime minister for being in a job role he not performing very well in.


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