by Emmanual Joseph
It’s an extremely serious report that must be of grave concern to Barbadians, the rating agencies and funding bodies.
That was how the President of the Economic Society of Barbados, Ryan Straughn, described the recent Economic Review presented by Governor of the Central Bank of Barbados, Dr. Delisle Worrell for the first half of this year.
Straughn told Barbados TODAY this afternoon, the fact that the governor focused extensively on protecting the island’s exchange peg, which had never been discussed like this before, underscored the seriousness of the Government’s finances. “The bank would not normally be talking about protecting the peg; so people have to be concerned,” cautioned Straughn.†Added to this worrying state of affairs, he warned, was the bank’s emphasis on protecting the foreign reserves.
“I am concerned about the focus on reserves management and exchange rate, which underscores that the seriousness of the government’s finances was now playing on the mind of the governor of the Central Bank, given that the country has adequate reserves for 16 weeks,” the economic society president declared.
He suggested that the Central Bank was now demonstrating a level of seriousness about how the actual fiscal condition was likely to have an impact on the island’s foreign reserves.
“The report seems to suggest that you have to protect the reserves from domestic demand in the economy, considering that domestic demand is depressed,” noted the economist.
“It doesn’t necessarily give you confidence as an investor,” Straughn insisted, submitting that the situation illustrated the need for Government to fix its fiscal problems itself.
Straughn argued that the question had to do with the recurrent government fiscal problem. He referred to the government’s current account difficulties and how they would play out.
Meanwhile, Barbadians will get an opportunity on Sunday to hear a comprehensive examination of the economy from the top brass of the Opposition Barbados Labour Party, including Leader Owen Arthur and Mia Mottley.
The BLP said it would also offer a way forward out of the current economic recession. The Women’s League and the League of Young Socialists are providing the forum on economic issues to be discussed at party headquarters at 4:30 p.m.
When he outlined the country’s economic prospects for the rest of this year, the governor submitted that the Government’s current Medium Term Fiscal Strategy would serve to reduce the debt to GDP ratio. Worrell noted that growth was expected based on private investment in the foreign exchange sectors.
But he also warned that the country’s economic difficulties were by no means over, even as growth, employment and inflation indicators remained less than satisfactory.
“However, any alternative economic strategy is likely to accelerate inflation and depress growth and employment, because it would exhaust foreign reserves and threaten the exchange rate,” the government’s principal economic advisor cautioned.
He suggested that with patience and determination on the part of all, the current strategy charted the path for future recovery.