Painful remedy

Central Bank Governor calls for even tighter fiscal measures

The Central Bank of Barbados is issuing yet another warning of the need for further “painful” fiscal measures to stave off currency devaluation.

In his January economic letter released on the bank’s website Wednesday, Governor Dr Delisle Worrell said Barbados had repeatedly failed to achieve the balance between its foreign exchange outflows and inflows, necessary for a stable economy.

Dr Worrell is therefore recommending further restriction on spending in order to protect the country’s foreign exchange reserves.

“The reserves are what protect us against the devaluation of our currency,” the bank chief stressed.

He repeated a previous caution that that the road to a promising future would be a painful one.

“The future is exceptionally promising, but it will not happen unless we make it happen, and like all worthwhile objectives, realizing the vision will not be painless.”

In an effort to strike a note of reassurance, however, he said the Central Bank remained in a position to provide US dollars at the current exchange rate of BDS$2 to the US dollar to meet all “legitimate” needs, if no other source was sufficient.

Dr Worrell suggested that the country has had to draw from the Central Bank’s reserves of foreign currency, simply because of a failure to strike the right fiscal balance over the years.

“We know when we have achieved that balance because in that case we do not have to dip into the Central Bank’s reserves of foreign currency to make up the difference. The country has failed to achieve that balance since 2013 and there remains a need to dampen spending further in order to protect the country’s reserves of foreign exchange,” he wrote in the January economic letter.

Government’s chief monetary adviser also said the Freundel Stuart administration was committed to a further reduction in the massive fiscal deficit in order to relieve pressure on the foreign exchange reserves.

“The immediate objective is to set the debt to GDP [gross domestic product] ratio firmly on a downward path by achieving a deficit which is lower than the increase in the GDP forecast for 2017,” he said, adding this would serve to boost confidence and give access to funds from banks and other investors whose contribution to Government financing had not risen in recent times.

On a slightly brighter note, he contended that this country’s leading sector, tourism, was among the most competitive in the Americas, except for the US, Canada, Mexico, Brazil, Costa Rica and Panama.

The Central Bank Governor argued that interest in tourism investment in the island remained strong.

“The quality of our international business services is high, and our financial regulation is kept up to speed with international standards. We export world-renowned rums and other products; and we are leading the Caribbean in the adoption of renewable energy,” he said, stressing that these foreign exchange sectors were the drivers of an open economy.

Dr Worrell also explained that the growth rate was used to measure the overall performance of the economy and that the level of foreign reserves, fiscal deficit and the burden of servicing the US dollar debt, showed whether the growth was based on stable foundations.
emmanueljoseph@barbadostoday.bb

14 Responses to Painful remedy

  1. The Negrocrat January 5, 2017 at 1:31 am

    This clown should be fired.
    He and the other members of his comedy team are no longer funny. They can’t get the economy on track, so they are killing us while they experiment.

    Reply
  2. ch January 5, 2017 at 1:37 am

    It is not the reserves per se that protect us from devaluation but proper, holistic management of this country’s economy as opposed to lies and alibis.
    For example- where is the real effort to stimulate and support agriculture and feed the nation in order to reduce our food import bill?
    Instead of the complete inertia and indifference that has characterized this sector for almost a decade now.
    There are acres of government-owned wasteland that should be used for agricultural programs for the young idlers in Barbados; no-one is concerned about the laxity that causes private landowners to give up because no serious measures are taken to address predial larceny or monkeys.
    Overall, there is wastage in all sectors and blatant mismanagement and lack of accountability for the people’s money.
    Then, the Auditor-General’s reports are ignored and swept aside because Bajans are sheep.
    We don’t need any more jargon in this failing economy- we need to stop poking at the rot in this country and cut it deep and clean to remove it and let us heal.

    Reply
  3. harry turnover January 5, 2017 at 7:10 am

    Ya mean EVERY YEAR since wunna get in power wunna gine come and say the SAME thing ? as expected at the beginning of the year we gine hear that painful measures MUST be implemented….after MORE TAXES ,ya gine hear the measures working …..,towards the end of the year ya gine hear that the measures din achieved what was expected …..this is NINE friggin years wunna did doing this to get the economy going and EVERYTHING in BIM has gone DOWNHILL…what all ya gine come wid now.
    I thought that the economy HAD TURNED THE CORNER and wunna did POMPASETTING …wha happen NOW?

    Reply
  4. Hal Austin January 5, 2017 at 7:17 am

    At the time of the financial crisis, I wrote in my N|otes from a Native Son, that the Bajan should fix against a basket of key currencies and goods, and float against the others.
    At the same time it should invest the Bds$1bn foreign reserves in a balance sheet bank, privatise non-core state enterprises and at the same time establish a sovereign wealth fund.
    I was opposed by every economist and politician. Now the governor of the central bank is putting devaluation back on the table.
    |This time, however, he is linking it to changes in fiscal policy. He is wrong.
    The correct tool is monetary and my original argument stands. Already the finance minister has warned that there will be no devaluation. H|ow then are we going to get out of this mess?
    Has the official Opposition got an alternative policy?

    Reply
  5. RHB January 5, 2017 at 8:08 am

    It is said that the definition of insanity is doing the same thing over and over and expecting a different result. That seems to be what the Governor and the MoF are doing. The mantra is always tighter fiscal measures. When that has not worked (how many times?), instead of trying the advice of other knowledgeable people, they just say and do the same thing again!

    Reply
  6. Richard Johnston January 5, 2017 at 8:54 am

    I’d be interested to know how many Finance and Bank officials have funds in offshore USD accounts.

    Reply
  7. Tony Webster January 5, 2017 at 9:11 am

    Well…the end-game beckons: evahbody speaking certain words in hushed tones; in innuendo; using oblique metaphors; and no-one in right political mind, can even purse lips to issue forth the dreaded D-word, so we speak softly…of Inscrutable Menacing Fiends, who either bear gifts, or bare fangs. Here we stand at de cross-roads, contemplating an a road-sign, which says: “Rocky Gully via Pain Road”, to the other, “Rocky Gully via Reality Street”… And to the third, “Rocky Gully via Invading Menacing Forces”.

    Sorry…there is no sign directing us to “Is we own fault Village”

    Reply
  8. Bajan January 5, 2017 at 12:18 pm

    I guarantee that they will blame the previous BLP Administration for them not being able to carry out the economic and social mandate they promised on the election platform these 8 years. Bajans still waiting for the cheap food supermarket you promised. Bajans paying very high taxes but yet still have to buy gauze and dressings for their sick family and friends in QEH and a lot of them rolling up in pain because doctors have no choice but to administer over the counter pain killers to them since QEH can’t afford the appropriate medications. Teachers more than before are pulling their pockets everyday or bringing to school food, providing breakfast and lunch for their young students that come to school starving. The free bus ride for school children had a major economic backlash that sent the economy further towards the negative. Deny all we want but this is our reality in 2017. But yet these same politicians had the guts to stand up in Parliament and declare themselves to be of ‘the political class’ in Bajan society. The same ‘political class’ that goes to Parliament and insult each other, hint about peoples sexuality (as though we care about a person’s sexual preference) and make ‘we are better them them’ comparisons to other less developed CARICOM countries. Thank God that a new generation of Bajans are thinking completely different than old style DLP vs BLP politics. Both parties are in for a rude cultural awakening.

    Reply
  9. Rickie Nurse January 5, 2017 at 12:49 pm

    This is an absolute admission of failure and an indictment of this government that has to result in a unanimous verdict of guilty as charged on all accounts, therefore the sentence has to be the removal of all sixteen from Parliament for this country of ours to heal and be on the road to recovery again.

    This is the result of taking the governance of this country under false pretenses, knowingly that they weren’t capable of doing the job, which they proported they were qualified to do. Had this been a major corporate company, the the CEO and the executive would have been fired for gross indifference and utter failure, I see no reason why this should not happen as punishment to these inert and inept lying bandicoots. He Delisle Worrell is part and parcel to this whole debacle.

    To those who are wondering if the Opposition has any solution to the problems which we are faced with, I am going to say this, history will repeat it’s self as was the previous instances of 76 and 94, a solution is there.

    Reply
  10. Ann Thomas January 5, 2017 at 12:49 pm

    Is the Central Bank going to stop printing money? When the Governor stops doing that, then he can talk and perhaps we will listen.

    Reply
  11. jus me January 5, 2017 at 1:05 pm

    Barbados Barbados Barbados.
    I sick hearing the word.
    Nuffin ent wrong wid BARBADOS.

    NUFFIN NUFFIN NUFFIN ya heah muh.

    People is whas Wrong.
    CRAP politicians, Money grubbers, Harlots Charletons Wasters Vagabonds.IDIOTS.
    and who tuh blame.
    WE !!!!!
    Cos us all allowed this crud to ride we ragged and its we elected dem.
    Further its WE wha gine tro dem in de trash.

    Reply
  12. F.A.Rudder January 5, 2017 at 2:16 pm

    May I ask! Did the past governments ever purchase gold from its sister state Guyana to off-set some of the economic burdens that are “Futures” for any government? Co-opratives will have to be locally created and “meeting turns” abundantly present in the local arena! Fight this epedemic Barbadians and solve it with Bajan enginuity!

    Reply
  13. Ossie Moore January 5, 2017 at 2:30 pm

    Wana gine play round and get wana graturity look like child’s play after all dem early morning risings? Man dah aint too good yea! Proactive measures did wanting long time ago! It real good gine wok and woking for today but yuh hafa plan tomorrow wid tact and innovation. I gone! Back up to de east!

    Reply
  14. T E Barker January 6, 2017 at 6:32 am

    The painful measures instituted over the past 9 years have clearly failed and are destined to do so again. Why persevere with failure? A new approach is warranted, one that has economic growth as its central plank. We have not achieved decent growth since 2007 and that is the main reason for our present woes. We need to get some major projects going very fast indeed.

    Reply

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