Barbados will not be entering into a borrowing agreement with the International Monetary Fund (IMF), at least “not at the moment”.
This assurance came from Governor of the Central Bank of Barbados, Dr DeLisle Worrell, who told journalists at a media briefing at the Central Bank today that the local currency was not in danger of being devalued either.
“We may all take confidence in the fact that we have adequate foreign reserves to protect the value of our currency; that our Government continues to tighten fiscal policy as needed to conserve the foreign reserves; that government, unions, and private businesses all agree that this is the correct response,” said Worrell.
He said, however, at the moment the Government was “actively” using the technical assistance of the international lending agency in an effort to cut its expenditure and plug the widening deficit.
“We are working closely with the IMF. We don’t need an agreement which would involve borrowing from the IMF at the moment because we have reserves which are more than adequate for our needs,” he said.
“As long as we have $1 billion in reserves nothing is going to happen to the currency,” added Worrell.
“At the same time we value the technical assistance and the advice that we get from the IMF and we are actively engaged with them in using that technical assistance in areas where we are aware that we need to build capacity [such] as tax administration, so that we make our revenue collection more robust, so we get the revenues that we expect coming in, also in the areas of managing and monitoring our statutory corporation,” explained Worrell.
The economist also stated that investor confidence had returned to the local economy as a result of Government’s fiscal programmes announced in the August 2013 Budget and reinforced by measures announced last December.
The level of confidence, he suggested, meant that those strategies were essentially the right ones.
“Confidence has come back,” he said. “The thing that we all recognized, and we have emphasized it in the central bank, is that we protect our exchange rate anchor and the value of our dollar by maintaining an adequate level of foreign reserves.
So when we saw the rate at which our foreign reserves were declining in the second half of last year people naturally became nervous. We cannot blame them. That is why we had to take very firm fiscal action because that is the way we correct that situation,” explained Worrell.
He said, however, those strategies, which are expected to run until the end of the 2015 fiscal year, needed to be “refined”.
“So in terms of marketing we have to be more focused in our marketing. In terms of our pricing we have to make sure we reach the right value point for each of our products so that people believe they are getting the right value for money,” he said.