All systems go for Barbadians to hold foreign currency bank accounts as of August 2, says Minister in the Ministry of Finance Ryan Straughn, as Government is banking on a significant turnaround in investor confidence in the economy and significant inflows of foreign exchange earnings.
Addressing a post-Cabinet media briefing on Thursday at Government Headquarters on Bay Street, Straughn said that, as promised, all residents will have the ability to open local foreign currency accounts from next Friday.
Straughn announced that the previous limit of $7,500 annually for residents in foreign exchange for travel would be increased to $20,000.
He said having achieved a level of stability in the economy, Government was now moving ahead with rebuilding investor confidence by better “regulating for growth”.
The announcement of local foreign currency accounts was first made by Prime Minister Mottley in her March Budget presentation and was to take effect July 1, but was later delayed.
Straughn said over the last few years there have been several people doing some “very interesting things with respect to foreign exchange”, and the time had come to put a stop to that and rebuild confidence in the system.
Without going into detail about the “interesting things”, Straughn explained that it was a matter of people “making arrangements” to source foreign currencies.
But he said that with the international reserves now healthy and the economy on a stable path, it was time to rebuild private sector confidence and for “normal service” to resume.
He said: “This is therefore seen as apart of the effort to doing that.
“By the same token, in the process of doing that it means that we have sought to increase the personal allowance with respect to travel facilities, for individuals which was at $7,500 annually, that is going to be increased to $20,000.
“We are assured at the moment that Government’s discipline will not in the near future have any significant impact on the foreign exchange position of the country, but we are now regulating in an environment where we want to encourage growth and attract foreign exchange into the country.”
But funds to be deposited in the foreign currency accounts may not be purchased from the local pool. The new regime is mainly designed so that individuals who receive payments in foreign currencies and business that carry out transactions overseas can now freely lodge those earnings in the local banking system.
In the past, those attempting to bring in foreign currencies had to convert 75 per cent of those earnings into local currency.
But Straughn said the change was a “signal to the country that we want persons to be able to utilize these accounts for the conduct of their business such that the availability of foreign exchange to transact both personal as well as commercial activity, can take place in Barbados with renewed confidence”.
He added: “The intent here really is to make sure that persons are no longer in the shadows in a sense or in a sense taking a risk in walking around with large amounts of foreign exchange.
“It will be available for your use. Therefore we want to bring some order to how these things are conducted.”
He also announced that with the introduction of foreign currency accounts, the two per cent foreign exchange fee introduced in 2017, would be capped at $100,000 so as to not disadvantage or deter those who were involved in massive transactions such as real estate operators.
Straughn said: “These are some of the basic things now that we are just trying to make sure that we give some confidence to all Barbadians, but certainly to all investors that as we go forward that we are regulating for an environment that will be conducive to growth.
“At the moment there are pretty much a significant number of transactions that take place outside of Barbados because of some of the issues with respect to access to foreign exchange in the past.
“Therefore, I expect the practitioners in the space – lawyers and accountants – will be going after that business given that we have a level of stability now that allows us to be able to do that.”