All time low

New red flag raised over Barbados’ foreign reserves

Barbados’ international reserves position has sunk even deeper into danger, putting even more pressure on the island’s prized exchange rate of BD$2 to US$1, a regional economist has warned.

Days before the Central Bank of Barbados is set to release its economic review of the Barbados economy for 2017, Marla Dukharan is reporting that the international reserves fell to an all time low of $482 million, or just under eight weeks of import cover, as at November last year.

The reserves have been on a downward trajectory with Government facing a high import bill, a massive debt of just over 100 per cent of gross domestic product (GDP), and a worrying deficit of about six per cent last year.

The reserves went from $705 million or 10.7 weeks of import cover at the end of March last year, to $635.5 million at the end of June, or 9.7 weeks of cover. By the end of September the reserves cushion was again deflated to reach 8.6 weeks of import cover or just $549.7 million.

In her Caribbean monthly economic report for January, Dukharan said the “international reserves fell 44 per cent year on year to US$241 million in November 2017”.

This, she said, was “the lowest level of reserves and the fastest year on year pace of decline in this century”.

“I estimate this level of reserves at roughly 7.6 weeks of imports. The main drivers of this precipitous drop in reserves is the extent of the Government deficit and the way in which it is financed – partly by Central Bank financing or printing of Barbados dollars,” Dukharan said.

“This is evidenced by the fact that the Barbados dollar monetary base expanded five per cent year on year in November 2017, when its ratio to international reserves stood at 10:1 indicative of the pressure on the exchange rate,” added Dukharan, who last year suggested that the Barbados dollar was over-valued.

Furthermore, the economist cautioned that the Central Bank’s financing of Government continues unabated despite numerous warnings, with the bank’s holdings in Central Government moving from 55 per cent to 77 per cent as at November 2017.

There have been mounting calls from worried economists and political pundits, as well as the business community, for Government to curb its spending and take urgent steps to shore up the reserves and return the economy to sustainable growth.

Calls have also been made for Government to approach the International Monetary Fund (IMF) for a reform programme.

Delivering the bad news about the falling reserves at the end of October last year Governor of the Central Bank Cleviston Haynes stayed away from taking a definite position on whether Government should bite the bullet and enter an IMF financing arrangement.

However, Haynes at the time warned that assistance from international development partners, including the Development Bank of Latin America, would not “address the overall issues we have in terms of the demands and supply of foreign exchange”.

At the same time, he said some tough decisions would have to be made in terms of state spending, while suggesting that divestment of some Government assets should be a key consideration.

The Freundel Stuart-led administration has been banking on the sale of the Barbados National Terminal Company Ltd as well as the Hilton Barbados Resort to help put a dent in its worryingly high deficit.

During the first nine months of last year Government’s overall debt had climbed to 144 per cent of GDP, while expenditure increased by $13.9 million at the time, largely due to an increase in grants to public institutions.

Just last week Stuart told the Barbados Chamber of Commerce and Industry that he was counting on the new Barbados Sustainable Recovery Plan (BSRP) to put the economy on an acceptable growth path.

Dukharan, who is scheduled to take part in a live stream debate with former Governor of the Central Bank Dr DeLisle Worrell tomorrow on the topic, Is Barbados the Next Greece?, pointed to an IMF report, saying growth was expected at less than one per cent in 2017 and 0.5 per cent in 2018 based on higher inflation.

During the pay per view event, the high profile economists, along with other guest panellists, are expected to discuss solutions for the ailing Barbados economy.

The Central Bank is scheduled to release its review of Barbados’ economic performance for 2017 and prospects for 2018 on Wednesday.

19 Responses to All time low

  1. John Everatt January 29, 2018 at 9:37 pm

    If anyone is surprised by this revelation then they should check their position on the stupid scale. Folks, nothing has changed since Worrel left. The civil service is still draining the central bank to the tune of $50 million a month. The government has no other way of meeting this huge payroll. They do not want to admit that their home grown economics have been a dismal failure so they keep adding more home grown stuff like the new Barbados Sustainable Recovery Plan. This government never had the ability to run this country as can be seen all over the place (sewage, roads, transport, etc). They just care about themselves and that pension that they will get.

  2. Francis January 29, 2018 at 9:46 pm

    All of the above might be correct.
    But what is this lady’s agenda???
    She is like a broken record and seem to
    Relish her revelations.
    What is her agenda???
    Just asking!!

    • harry turnover January 30, 2018 at 7:48 am

      Yard fowl…her agenda IS TO TELL THE TRUTH….the TRUTH has NO AGENDA.
      When The Central Bank Governor gives his report that the reserves have fallen further ,you should also ask what is his agenda too,because he would also sound like a broken record ,but in this case you and the other yard fowls would not relish his revelations.

    • harry turnover January 30, 2018 at 8:02 am

      Francis… YOU is a FIDIOT…and people gine see when the Governor releases his report tomorrow.
      She is an ECONOMIST..she knows and has access to Economic matters not you…you are just a disgruntled yard fowl ..not even a paling cock who has a higher status than you by virtue of you being in the yard and he on a paling.

      “All of the above might be correct.
      But what is this lady’s agenda “???
      One of your yard fowl associates should tell you that IF it is correct,then there would be no agenda since it would have been the TRUTH.

    • hcalndre January 30, 2018 at 1:00 pm

      The agenda is to let the people of Barbados know the truth about the economy of Barbados instead of being lied to. She don`t have to care if the economy dries up or not.

    • gsmiley January 30, 2018 at 2:22 pm

      Francis how do you deduce that she seems to relish in her revelations?

      She never chuckles nor is there a smile in her voice when she reports.

      What was Worrell’s agenda?

      And he was appointed by the current administration.

  3. Saga Boy January 30, 2018 at 2:38 am

    The Barbados-based FinTech company, Bitt Inc. proudly announced the appointment of Marla Dukharan as Chief Economist, effective August 1, 2017. Her agenda is quite clear. What is the goal of entities such as Bitt Inc? When you examine it, one understands why she continues to draw attention to our foreign reserves. The goal of her company is to replace cash money. Is is hoped that one day companies like Bitt Inc will assist in the development of a digital currency that will become a type of one world currency. This will allow for the currency to have the same value around the world, doing away with the need for currency exchange as we see it now. Perhaps she wants Barbados to become a pioneer in this respect.

  4. Tony Webster January 30, 2018 at 5:58 am

    Saga Boy…yes, she has a new alliance, but her facts- and analysis- words are difficult to challenge, both previously and now. Do you have …err….any “alternative facts”?

    The sad truth is that S.S. Barbados continues “full speed ahead”….to the shoals in plain view. All very, very sad, but hopefully will be very instructive for our children, as we adults clearly (sorry) have scales covering our eyes.

    Start learning mandarin.

  5. The Negrocrat January 30, 2018 at 6:56 am

    Facts don’t lie.

  6. Ralph W Talma January 30, 2018 at 9:04 am

    You are so right Mr Webster. Something needs to be done urgently.

  7. David Brathwaite January 30, 2018 at 9:17 am

    Her agenda is to be the most articulate economist in Barbados at the point in time; and she is doing a fantastic job!

  8. milli watt January 30, 2018 at 9:36 am

    DON’T PANIC!………..

  9. archy perch January 30, 2018 at 10:06 am

    How come Ms. Dukharan does not speak and compare Barbados withe her country Trinidad. The Trinidad government has embarked on much of the same economic programmes in order to save their their country and keep things afloat. Trinidadians have taken over this island Barbados, Owen Arthur opened the door.
    I learning to play the steel pan.

    • hcalndre January 30, 2018 at 1:07 pm

      Great instrument! a Trinidad invention.

  10. Carlisle Norville January 30, 2018 at 10:09 am

    Mr: frundel Stuart,is of the opinion that he has coloured people here in Barbados all figured out, all they do is talk, talk & talk they are trained from infants all the way up to high school, & university to keep their mouths shut, ( its the Modus Operandi) of the bagan culture ,bagans are also taught that jesus is white, God is white everything white is alright, the devill is black, if you black you better stand back, even in our court system, you do not see bagan whites in prison, or hear they are locked up for drugs, no whites in barbados got it made, so people like frundel stuart, enjoy entertaining whites that come here often, he feels @ home with them, our laws in palament were handed down from britton, on how to govern blacks here in barbados.we need lots of changes in our system, or we black people are only going to be modern day Slaves.( time to change the boys & girls in parlament that dont know what they are doing.according to Mr: Owen Arthur.

    • hcalndre January 30, 2018 at 1:58 pm

      @Carlisle Norville; you maybe partly right saying that whites are not imprisoned in Barbados. There are people of color (black) that have taken the baton from the colonist, lives like them, get rich and treat their own even worse and are untouchable that would be in jail in other countries.

  11. Richard Johnston January 30, 2018 at 11:56 am

    Devaluation would have no immediate impact on reserves or import cover, but it could boost economic growth since Barbados is a premium tourist destination with substandard infrastructure.

  12. Mack January 30, 2018 at 11:57 am

    Francis!! The lady is a voice of knowledge and reason crying out to inform the masses of that, which the politicians would not tell them.

    It is obviously you are like a blind mice, just following along blindly. Because of your affiliations.

    You will understand what she is saying when things come to a screaching halt.

  13. Helicopter(8P) January 30, 2018 at 4:16 pm

    At this period in time AD; Barbados needs Billion dollar brains at solving its equation. Economic is a disiplined subject and definately not a cricket match. Staring out with operating an old sugar estate one would see how important checks and balances were to keeping it financially stable. It looks as though we will tranform into a moped society as Bermuda or as some Indian Ocean islands.


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