In spite of Government borrowing to shore up the foreign reserves, that pool of money continues to decline, suffering a major drop last month.
So says Barbados Labour Party spokesman on economic affairs, Dr Clyde Mascoll, and Opposition Leader Mia Mottley.
Following a steep fall in reserves during the last quarter of 2013, Government negotiated a loan of over $250 million from international lending agency Credit Suisse, but Mascoll is now contending that the pool of money is fast going down again.
“Since December of last year, up until the end of January this year, our reserves continued to fall, and they fell by in excess of $100 million during the month of January,” he said last night at the ninth People’s Assembly at Ellerslie Secondary School.
He indicated that the slide continued but updated figures were difficult to obtain.
“The truth is what is happening is that they are trying to stop us getting access to information.”
He said that the current dim status of Barbados’ reserves of hard currency contrasts with what was left in the Central Bank at the end of the last BLP administration.
“Over the last five years, the only thing that stood out in the economy is that this country had a stock of reserves that exceeded any other five year period . . . we were at 19 and 20 weeks and above reserve.”
Alluding to a BLP 2013 election campaign proposal to put money in people’s pockets through a VAT reduction and a $90 million stimulus that was resisted by incumbent Democratic Labour Party as something that would drain foreign reserves, Mascoll said: “Since April of last year our reserves have been declining rapidly; that had nothing to do with you spending because the economy continues to contract.
“So why did the reserves fall? The reserves fell because the Government has had to print money at the Central Bank of Barbados.”
Mascoll, a UWI lecturer in economics, said: “The most dangerous thing that affects the reserves of a Caribbean economy is when a government spends more than it earns, and spends more excessively than it earns.”
Mottley not only condemned this reported continued decline in foreign reserves, but also attacked the conditions under which money
to shore up that pool was borrowed.
“The Credit Suisse loan put some conditions on us that no self-respecting country should have to accept, but when your only choice is printing that money or taking that loan, [the Government was forced in December] to take it because it was incapable of choosing who would lend money to it,” she said.
The Opposition Leader continued: “In spite of that loan, $293 million, coming in and raising the reserves, not money that was earned, but we borrowed in the worst conditions . . . the reserves continue to drop in the last five weeks, over a $100 million. We are in crisis in this country.”