Senators concerned about island’s foreign reserves position

Two of this country’s lawmakers are worried about the level of foreign exchange leaking from the country, and a finger is being pointed at the tourism sector.

Senator John Watson, an entrepreneur in the indigenous craft business, said Barbados was facing a foreign exchange crisis, as he cited the less than nine weeks of import cover.

But the Senator said he suspected that one of the problems was “retention” or “repatriation” of the foreign currency generated by various players in tourism.

Speaking today during debate on the Land Tax Amendment Bill 2018, Watson told the Upper House: “I believe that much of the foreign exchange that is earned by Barbados does not necessarily come back to Barbados . . . and I think it is something that we need to take seriously.

“It is not comforting for Barbadians at this time to see that we are having less than eight weeks of foreign reserves . . . . The tourist industry and the hotel sector in particular, should be so encouraged not only to make sure that we get maximum return on the foreign exchange earned, but that it causes us to save foreign exchange.”

Supporting the concerns of Senator Watson was Government Senator Reginald Hunte who cautioned that foreign exchange generated from tourism might not be “going where it should”. However, he refused to identify who might either be taking foreign exchange out of the country or not bringing it in the first place.

Meanwhile, Watson, who called for greater linkages between tourism and sectors such as manufacturing and agriculture, said tourism and international business were important economic anchors for the economy.

“We need tourism and the reason why we need it is for foreign exchange. Without the tourism industry and the international business sector, we probably would have a greater foreign exchange problem than we presently have and therefore it is incumbent upon us that having incentivized [the tourism] sector in the way that we have, that we should expect more returns.

“If we have done so much for the tourism sector, we really should not have a problem with foreign reserves, but we do have a problem with foreign reserves and it cannot all be in terms of spending of the foreign exchange.

“I believe it has to do with the retention or the repatriation of the foreign exchanged earned by Barbados.”

2 Responses to Senators concerned about island’s foreign reserves position

  1. John Everatt January 25, 2018 at 6:43 am

    Since the 2% tax on foreign exchange transactions there has been an underground economy like we have never seen before. People wishing to buy pounds or dollars (hard currency) can buy it without problem Taxing will not get us out of this economic disaster. Sound fiscal policies will.

    Reply
  2. Tony Webster January 25, 2018 at 5:51 pm

    @ John Everatt: exactly. My late banking mentor Tony McConney, once discussed the then (1975 or so) Jamaica’s wrong-headed policy reaction to declining F/X reserves, by flaying all with draconian laws and regulations. He was then just back from many years in top Barclays branches in Jamaica, and had taken up his position of Senior Manager, Barbados….do I was all ears. Said he to me:
    ” It ends up like trying to contain water in your palm…by squeezing harder and harder..it only leaks out the more between your fingers”
    And he made a fist, to demonstrate how futile it is!

    I guess, it might be wiser to establish and maintain confidence in the economy; the currency; and in the folks responsible for administration of it all…..but that’s my take-away…Tony McConney didn’t say so. He ended his banking career as a much-respected and beloved Caribbean Head Office Director, and is now handling the financial side of things at Barclays branch ” up there” somewhere.

    Reply

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