Barbadians must seek to overcome their risk-averse nature, if they are to take advantage of one of this country’s best periods for investment, urges a top Government economic advisor.
According to Ambassador Clyde Mascoll: “In this environment where money is now cheaper, surviving only on the income from your job is not the way to go. Do not be satisfied with an income from your workplace. See yourself being able to add value and build wealth.”
He declared that with certainty returned to the Barbados economy, as it relates to the stability of the Barbados dollar, for the first time in almost a decade, lending institutions are able to offer fixed interest rates.
He also noted since the exchange rate matter has been settled, expectation on prices is another area that has been stabilized.
He said: “With regards to the whole question of investment, this is the right time for this activity. Not too long ago when things were uncertain with regards to the foreign reserve position and you go to a commercial entity, they can hardly offer you a fixed rate. The interest rate is only variable that I know that captures both the present and the future.
“Anytime that you are uncertain about the exchange rate, the first thing you do is anticipate high inflation. So, when you remove the uncertainty about the exchange rate, we
increase the certainty about the future. So, it has become far easier to secure a loan at much reduced interest rates. This is a time to get positive.”
The economist highlighted the stability of the foreign reserves, which now stand at $1.2 billion, up from $400 million when Government took office in May 2018. He also pointed out that Barbados’ debt to GDP ratio is now hovering at around 121 per cent, down from 170 per cent last year.
But Ambassador Mascoll noted that even
with these positive indicators, coupled with the fact that Government income relief measures, which begins this month, would see some workers taking home more of their salary, there needs to be change in the Barbadian investment culture.
He declared: “With those low interest rates on deposits, Barbadians need to be less risk averse. It really makes no sense putting money on commercial banks. In fact, the commercial banks don’t really need your money and they are doing everything to stop you from bringing it.
“We need to develop a culture where we too need to start taking some chances and look elsewhere.
“In Barbados we never understood the concept of added value to our major products, whereas in Trinidad, a petrochemical industry was developed around their petroleum product.
“Therefore, the concept of added value and taking risk, [the Trinidadians] understood it better.”