Tourism guilty of foreign exchange leakage

The vital tourism industry, Barbados’ main revenue earner, is being blamed for also shipping critical foreign exchange out of the country.

And with the island struggling to overcome a 14-year low in its foreign exchange reserves, a former Central Bank economist is warning now is the time to plug the opening that is suctioning out these reserves.

Managing Director of Antilles Economics Stacia Howard this morning told a panel discussion on Improving Economic Performance Through Enhanced Tourism Competitiveness that while tourists were coming in record numbers and bringing in foreign exchange, too much of that money goes right back out through the importation of goods and services for the tourism sector.

“When we take out loans, especially foreign loans to refurbish our properties, we have to pay back that debt using foreign exchange. So there are a lot of leakages that go out of the country, and it is not that we can necessarily stop doing those things, it is to be aware that the money we are earning is not being retained in the country. And there may be ways in which you can substitute some of that for local production and local services to help minimize some of that leakage,” Howard told the panel discussion which formed part of the Barbados Hotel and Tourism Association’s (BHTA) quarterly meeting at the Hilton Barbados Resort.

In fact, the former Central Bank senior economist wondered whether there was any link between the record tourist arrivals of just over 632,000 last year and the drop in foreign exchange reserves, which stood at 10.3 weeks of import cover at the end of December 2016.

“You would see that last year we had record numbers of arrivals and our reserves dropped under 12 weeks. Is that the fault of tourism? You did your job – the tourists came – but because the relationship between tourism and the rest of the economy needs strengthening that is why we don’t always reap the rewards that we need to reap.”

Howard admitted that the local economy was driven by the tourism industry, which she said had the potential to lift Barbados out of its current economic slump.

She said the bread and butter industry helped to drive economic growth through investment, visitor spend and employment.

However, the former CIBC FirstCaribbean International Bank strategy and economic analyst insisted that for the sector to “lift the country further we have got to up our game even further”.

“We’ve got to get very critical about everything we’re doing. We’ve got to look carefully. Do we need to spend the money now? Can we wait? Can the foreign exchange reserves afford for us to do this now? If we do it now, how are we going to do it in a way that minimizes the impact on the reserves? How are we going to do it in a way that minimizes the impact on employment?”

Howard added that while hoteliers had to do what was considered best for their companies and what “make the most sense”, they should find ways to use more locally produced items.

“So you reach a point where as an industry… you can make a decision, what are we going to do as a group to help make sure that we minimize all of the leakages between us the rest of the economy, and do our best to make sure that we are not just getting more tourists here but the tourist are coming are the ones that can help lift us out?” she said.

marlonmadden@barbadostoday.bb

14 Responses to Tourism guilty of foreign exchange leakage

  1. Fidel March 9, 2017 at 4:24 am

    excellent point by the economist – more hotels need to at least make an attempt to support local farmers, entertainers and craft persons. Then the benefits of increased visitors will ripple through the economy.

    Reply
  2. jrsmith March 9, 2017 at 6:03 am

    Where are these people living , the tourism industry cannot pull barbados back on tract , thats why barbados has failed because its so easy counting people, and nothing else is attempted thats why we lost our sugar industry , thats why we have also lost our rum industry, thats why barbados is there for the foreigners to take…..sold out by our politicians………

    After all this time this lady realize what is happening , these companies involve in the tourist industry was always sending they profits out of barbados , our politicians fail to say or do anything , also lots of these companies were listed in the (Audit General’s ) report are ones who owes the Barbados treasury, hundreds of million of dollars………..

    Reply
    • Donild Trimp March 9, 2017 at 4:56 pm

      Right on the ball JR.

      I was in Barbados 2 weeks ago and I asked a politician who is hoping to be elected in the next general elections to tell me what steps will be taken if elected to recover the millions of dollars owed by businesses to the Gov’t of Barbados.

      The reply was, “the current Gov’t tried to recover that money and failed so there is nothing a new Gov’t can do to change that outcome”.

      Barbados is a banana republic and whoever is running for office is only doing so to earn a paycheck. These people are a bunch of jokers.

      Barbadians should think hard and long before changing the current Gov’t for another bunch of self centered individuals whose main objective is to live off the taxpayers purse and to enrich themselves at the taxpayers expense.

      Reply
      • Donild Trimp March 9, 2017 at 5:00 pm

        Tourism in a place like Barbados is a low wage sector industry.

        It exploits the locals and pay them slave wages.

        Get real!!!!!!!!!!!!!!!!!!!!

        Reply
  3. Carson C Cadogan March 9, 2017 at 8:08 am

    She does not have a clue what she is saying.

    The linkage between between the Tourism sector and local industries in Barbados is far greater than any other industry operating here.

    The spin off from Tourism foreign exchange has a very wide ripple effect. The Tourism industry is one of the only industries in Barbados firing on all cylinders. The Tourism sector has every right to the use of foreign exchange.

    In case she does not know Hotels have to be constantly refurbish in order to keep them on a World class level.

    Reply
  4. Adrian Loveridge March 9, 2017 at 8:29 am

    Surprise, Surprise! You grant just ONE tourism player unique and unilateral concessions including 40 year tax holiday despite them collecting the majority of their revenue offshore without paying any significant amount of VAT and it comes as a surprise that disadvantaged other tourism partners are trying to catch-up with similar tactics?

    Reply
    • Gearbox1964 March 9, 2017 at 1:01 pm

      Totally agree. Sandals never should have been granted the extremely generous and bias concessions it was granted…but obviously some person(s) in gov’t benefitting personally from that arrangement. I heard that some politicians in Guyana got charged recently, when de hell dah gine start happening bout hay??

      Reply
  5. tsquires March 9, 2017 at 10:49 am

    Amen and ahmen to all of you as there is common sense in each response, let us the ordinary citizens awaken and cease letting our political neophytes speak for us at every level, as there is much we can do to help Barbados, and that is all I am really concerned about.

    Reply
  6. William March 9, 2017 at 11:04 am

    Is it possible that with all the talk about devaluation, the persons who have access to foreign exchange in cash are also hoarding it

    Reply
  7. Simon Jackson March 10, 2017 at 2:08 pm

    One of the main reasons for the disparity between tourism arrivals and foreign exchange influx is that the type of tourist we
    attract has changed. So many people now are coming here to all inclusive resorts which give no incentive to spend money while here…if you’ve already paid for everything,why pay more? This type of tourism has increased significantly and I’m willing to bet had had a large bearing on the level of forex coming in

    Reply
  8. Watchful Warrior March 11, 2017 at 1:41 am

    You killed manufacturing with over taxes
    You waste money buying seats for people!e to come here
    You spend money on housing for the poor but never let them love in it cause the rent too high…
    You don’t fix the roads bit use the road tax to do other things
    You don’t buy medication and medical supplies but expect QEH to function
    You spend money on fireworks but lambasted those who said no not a good idea
    You implemented taxes that burgeoning the people
    You killed the offshore market
    You give away a precious resource like black belly sheep cause it ain’t bringing back no revenue
    You won’t diversify the agricultural industry..stick to king sugar hummmm
    You won’t allow emerging businesses to thrive without taxing them to death
    You ignore the calls of those with experience and knowledge not to allow the country to falter
    But now you want the handouts to come save you… And it might…at the cost of our children…
    So no…I don’t intend to just accept another downgrade and now read that tourism is a major source of foreign exchange leakage … Because tourism is bringing in money for others and You keep telling me visitor arrivals up all the time…What nonsensical jackassery I am learning today about my nation….

    Reply
  9. chris hill March 11, 2017 at 7:53 am

    yes as a small island state we do bleed foreign reserves however the key is to offset the hemorrhaging through other foreign exchange earners and balances such as sugar, seafood, growing our own food, green energy etc. with that said the large looting comes from international companies such as Cost u Less and Emira and many others that move profit dividends every quarter. a 3 year moratorium needs to be put in place to stop this out flow.

    Reply
  10. G.Kendrick March 13, 2017 at 11:27 am

    We have just spent 2 months in Barbados, renting a house on the West Coast. We brought and changed £10,000 ($34,000) here, to pay for our accomodation, car rental etc. and have done so for the last ten years. People staying on an All inclusive basis pay for their holidays in the country of origin and bring next to nothing in foreign currency. The poor wages that the hotels pay do little for your economy in comparison to the huge profits made from each guest in the foreign countries. However, each year it is getting increasingly harder to access the beach due to building . Gun crime is increasing at an alarming rate and the police are failing to address it. On an island the size of Barbados, crime should be eliminated at a stroke. My husband is a retired British police man and despairs at the inadequacy of the police force.Add Zika to all this, and you have got a recipe for disaster. It’s not rocket science .

    Reply
  11. Manfred Humphries March 14, 2017 at 12:16 pm

    Inflation is not a shortage of goods, it is a surplus of money, and the people who are experiencing it should be the people who have profited from impoverishing the other 90% of the population.

    To restore some balance, look at the items that are available for the comfort of the entitled rich, and tax the hell out of them… double or triple the tax on luxury cars, expensive imports, jewelry, wines and all the other trinkets and toys of the rich and famous.

    You could charge a tax on financing abroad as well… Too daring? Does it impact your “benefactors?” you can pay up now, or at the next election.

    Reply

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