Get cracking, Chris!

Worrell calls for decisive action on the national deficit

Despite its ongoing economic challenges, ex-Central Bank Governor Dr DeLisle Worrell suggests overseas investors are still eager to invest millions in the Barbados economy.

However, writing in his November newsletter, Worrell said these potential investors were currently holding back due to the unstable economic environment and the threat of a devaluation of the Barbados dollar, which is currently pegged two to one against the United States currency.

Worrell therefore called on the local authorities to take “decisive action” to close the national Budget deficit and to improve the performance of the public sector.

“There is much that Barbadian policymakers can do to lend greater confidence to those who are interested in investment in Barbados,” the ex-Governor stated, adding that “the most urgent task is to effectively reduce Government’s deficit to relieve pressure on the foreign exchange market.

“Foreign exchange shortages are still widely reported, and importers and others needing foreign exchange are being placed in a queue. This naturally puts a damper on incoming investment,” he noted with the country’s foreign exchange reserves having plunged below the standard 12 weeks benchmark to 8.6 weeks of imports, or just $549.7 million, at the end of September.

This has caused much unease both locally and internationally, with some officials calling on the Freundel Stuart administration to take urgent steps to shore up the reserves and cut its spending.

Without making any mention of Government’s new National Sustainable Recovery Plan 2017, which is due to go before Cabinet this month, Worrell insisted that any uncertainty could be reduced by “appropriate policy”.

“Because our country is small, a small capital inflow by international standards can provide a major boost to our economy. There are investors who are eager to invest in Barbados, the international climate notwithstanding. What they need is a more stable domestic economic environment, without the threat of a devaluation,” he said, adding that investors must also be reassured that administrative and regulatory systems are on par with major financial centres like New York, London and Switzerland.

“Finally, they expect a high degree of worker engagement and productivity. These are matters all Barbadians and our Government can and must do something about. The country’s future growth depends on how well we meet these challenges,” Worrell stressed.

The prominent economist acknowledged that there were risks associated with any investment.

However, he argued that investors were often willing to take them if they were assured of better returns.

At the same time, Worrell pointed out that “investors worry that expected returns from their investment may not materialize because new restrictions are imposed, or existing regulations are amended”.

“Other concerns are that taxes may be increased or losses result from fluctuations in exchange rates or interest rates. These risks may all be lowered or eliminated by official policy changes,” he insisted, adding that “once financial markets are reassured about the stability of the foreign exchange market, Government must turn its attention to the regulatory and administrative framework affecting potential investors,” he said.

The former Governor, who was fired back in February at the height of public disagreement with Minister of Finance Chris Sinckler on economic and administrative policy, also acknowledged that Barbados was competing with other jurisdictions for investments in hotels, international businesses, energy, spirits and other large projects.

Therefore, he said, it was necessary for the island to improve its competitiveness and doing business rankings.

Further highlighting the challenges facing Government, Worrell pointed to the World Economic Forum’s Global Competitiveness Report, saying many of the respondents believed “regulation has become more burdensome, the legal framework less efficient and that Government has been wasteful in its spending”.

11 Responses to Get cracking, Chris!

  1. Angus Benn
    Angus Benn November 13, 2017 at 11:04 pm

    If they take you back tomorrow you will be saying something different. I think that every one know the story about the fox by now.

  2. John Everatt November 14, 2017 at 2:55 am

    Yeah right, now you say this but did not dare to say it when you had the power to change things.

  3. luther thorne November 14, 2017 at 3:12 am

    Deal with what the man says and not with the man. It comes across as childish to do otherwise.

  4. Tony Webster November 14, 2017 at 5:54 am

    So good to have the Guv’ still intimately engaged. I venture to encapsulate his offering: we can, and must, re-invent Barbados! Not some…but all key components of a poliicall-socio-economic model. If we we dilly-ally, or fail, or fail to deal with the elephant in the room, we bequeath forty years in a wildernes we cannot contemplate, to our children, and to generations yet to come. The medicine needed, is exalted political leadership, plus a new, all-encompassing buy-in by all patriotic citizens, and a train-load of personal suffering by citizens, over several years.

    Our relevance in the world is at a perilous point. Where are the leaders critically-needed to lead us out of this morass?
    Bajans, please pray like you have never prayed before.

    Last train to San Fernando …just pulling out…

  5. Andrew Simpson November 14, 2017 at 6:58 am

    The prescription is locked in the cabinet.
    All Barbadians must be treated against this epidemic.

  6. Lee November 14, 2017 at 10:27 am

    My prescription is to liberalize foreign exchange commercial bank deposits and so further “dollarize” the economy (which is already partially dollarized). Restrictions on private foreign exchange bank holdings has – and is – one of the reasons for the jittery investment climate. Dollarization of the currency will not persist if interest rates for US deposits is kept at zero whilst Barbados dollar deposits earn a reasonable interest.

  7. milli watt November 14, 2017 at 3:52 pm

    but boss if dey do dat I out a job……I prefer you fired and tied up in court. you clearly got to much time on your hands and you doing to much thinking.

  8. Helicopter(8P) November 14, 2017 at 4:21 pm

    No turning back that is what is ment in the minds of our young innovative Barbadians. “Once bitten twice shy” ! We are in a Caricom community but at present it boilds down to, “Barbados chatel house family”!

  9. Jus me November 14, 2017 at 4:26 pm

    My comments await moderstion

    To the problems of Barbados

  10. Belfast November 14, 2017 at 10:06 pm

    The man who is largely responsible for the local commercial banks, paying Bajans $1.00 on every $20,000 of a deposit account. On ya bike!

    “Make Barbados an almshouse case again”

  11. Darson November 17, 2017 at 8:18 am

    It is not all About Chris Dr Worrell : I do Believe Legal and Administrative Regulations, and the slow and some time retarded way of doing business is the main problem , you all are too slow and way behind in the real business world , make it easier to do business there Please.,and maybe allow Bajans to hold Foreign Currency accounts as well as Barbados dollar , then we could bring our money home , and have no fear of devaluation. maybe we could pay at least a 4 % on deposits , but not even a 2% .maybe the Rate of Deposits to bank reserves need to be adjusted and then the Central Bank holdings adjusted as well.
    this could be a game changer , we need to understand that if or when the dollar Devalue , it is not just the paper , it is our homes ,insurance policies ,savings… , so we all need to do our best to see it never happen , Leaders and Opposition need to explain the consequences so others really understand.


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