The Barbados private sector agency has raised the alarm that their members have had to wait for foreign exchange to be released from commercial banks to honour purchase requests. This is not good news for Barbadians who have had to tighten their belts for eight long years. Have we not been boasting of record arrivals for the last two years? What is happening!
The Governor of the Central Bank warned Barbadians in a document posted to the Central Bank website last week that the country has failed to manage the balance in foreign exchange inflows and outflows since 2013. Based on the Governor’s concern it is safe to assume that our international reserves have fallen from 900.3 million or 14 weeks of imports at the end of the 3rd quarter -to what?
With tourism booming by all account YET foreign reserves falling the solution is to increase tourist arrivals, foreign direct investment AND decrease demand for imports. If the reserves continue to fall we will not be able to defend our peg to the US dollar. The price of oil which has started to increase will not help our cause. Wait a minute -why do we pontificate about tourist arrivals? Should we not heed the advice of the official from Singapore who indicated at a conference in Barbados a couple years ago we must measure the success of tourism by revenue receipts and NOT number of tourists.
With sinking foreign reserves so too will investor confidence on the local and international markets. Several huge investment projects like Sam Lord’s Hotel, Hyatt Hotel, Beaches Hotel, Four Seasons, Marina and others have not started as promised by the government. Whether we agree if the projects should be implemented or not, the inability of the government to mobilize them has affected the plan to inject activity in the economy.
The obvious question is -what next? With a year to go before the next general election one thing we know for sure -the Democratic Labour Party will not have a strong economy to support a campaign message to win votes. BU’s prediction is that this will be one of the ‘nastiness’ general elections since Independence.