Minister of Finance Chris Sinckler is urging Barbadians to pay little attention to the “armchair pundits” who speak of continued rapid decline in the country’s foreign exchange reserves.
Sinckler contended that people who were not privy to the facts were unduly alarming the public and therefore Barbadians should only pay attention to the official reports from the Central Bank of Barbados.
“When they can’t wait on official information to come, they then put out their own misinformation and fake news and expect that authorities are to continually correct their misinformation. I think it is very unfortunate that this is the stage we have reached, but it is not something that is foreign to Barbados,” Sinckler told the media yesterday on the fringes of the annual Easter kite-flying competition in his St Michael North West constituency.
Sinckler did not name the so-called armchair pundits, however, regional economist Marla Dukharan stated recently that Barbados’ foreign exchange reserves continued to decline, reaching just 6.1 weeks of import cover or US$237 million at the end of January.
In her Caribbean Monthly Economic Report, Dukharan indicated that “reserves fell 26.5 per cent year on year”, and warned that the reserves could possibly be even lower at the end of March given a number of factors.
“With oil prices inching up, ongoing Central Bank financing of the Government and weak growth in stay over arrivals in quarter four of 2017 – possibly affected by the sewage leakage – there is a risk that reserves may have fallen even further in February and March 2018,” she said.
“Central Bank claims on Government reached 78 per cent of total Central Bank assets in January 2018, up from 73 per cent in January 2017. Growth for 2017 was estimated by the Central Bank at one per cent, which we expect to be revised downward, and central government debt to Gross Domestic Product is the third highest in the world at 146 per cent,” she said.
Dukharan said while the Central Bank had announced a decline in the fiscal deficit for the first nine months of the current fiscal year, “it is unclear how much of this decline was based on rising arrears, as we have seen in the past”.
In late January, the respected economist had placed the reserves at $482 million, or just under eight weeks of import cover as at November last year.
Days later, Central Bank Governor Cleviston Haynes revealed that the situation was even worse as of the end of December last year, falling at the time to $410 million, or 6.6 weeks of import cover – just over half of the recommended 12 weeks.
Former Central Bank Governor Dr DeLisle Worrell has also been commenting on the state of the reserves, warning last month that the Freundel Stuart administration was in danger of losing control of the BDS$2 to US$1 exchange rate.
“The Central Bank’s foreign reserves continue to be in free fall, with the failure of Government’s corrective strategy. The current costs of Government operations exceeded revenues by $288 million between April and December last year, and Central Bank’s lending to the public sector increased by $372 million during the year. Unless this gap is closed foreign reserves will be exhausted and Government will lose control of the exchange rate,” Worrell said.
Sinckler yesterday did not directly address the comments by either Dukharan or Worrell, nor did he reveal the current state of the reserves, arguing that to make that announcement would pre-empt the Central Bank’s report for the first quarter of this year.
However, he stressed that there was no need to panic and that all speculations would be addressed very shortly.
“There is absolutely no need for any panic; reserves are reported on a quarterly basis. We do not report on a daily or weekly basis and there is a very good reason why this is the case . . . .The first quarter of this year has ended and the Central Bank will very shortly do its quarterly report and all of the speculation about reserves would be addressed at that time and I am not going to jump ahead of the Governor of the Central Bank. At that time we will see, and I think some people will see what they want to see and hear what they want to hear because people have this delight about talking about the things [that are] wrong with Barbados,” he said.
The minister also stressed that Barbadians should take comfort in the fact that there have been no cries of chronic foreign exchange shortages from businesses and financial institutions.
“For the time being the country continues to function and people continue to go about their daily business,” he said.
“Foreign purchases are being made, we have not heard the banks complaining that there is no foreign exchange in Barbados to conduct business. So hint, hint; pay attention to the people that matter, the ones who know the information, the ones who collate the information, those are ones you should listen to,” Sinckler admonished.