Foreign reserves still down
Acting Governor of the Central Bank, Cleviston Haynes, during his presentation at the Social Partnership meeting.
The six-month economic review by the Central Bank of Barbados (CBB) shows the hope of government to bring the foreign reserves up to the standard 12 weeks of import still has not materialised.
This was revealed today by the Acting Governor, Cleviston Haynes, during a presentation at the full meeting of the Social Partnership at the Hilton Hotel.
The precarious situation of declining foreign reserves was first brought to light by former CBB Governor, Dr. Delisle Worrell back in January when he delivered the 2016 economic review. At that time the reserves stood at 10.3 weeks of imports and were expected to be bolstered by the sale of the Barbados National Oil Company Limited (BNOCL) to SOL for $100 million and the construction of the $100 million Hyatt Hotel - both of which have been delayed by regulatory and judicial processes.
Haynes said for the first quarter of 2017 the reserves increased to $705 million mostly due to high tourism receipts. For the second quarter, which ended in June the reserves declined once again to $635 million, equivalent to 9.7 weeks of imports and Haynes explained this was due to government's servicing of debt.
He noted while the reserves are currently above where lowest levels have been in the past, Government needs to address the decline with “priority”.
“But from a comfort perspective we want to see our reserves at a much higher level. One of the key policy objectives for us is to maintain the exchange rate stability. As part of the effort to maintain that exchange rate stability you have to ensure that you have adequate reserve buffer at all times. Therefore at 9.7 weeks, even though that is manageable, it is still a situation which we need to address as a priority going forward.”
The heavy inflow of private sector capital has fallen off significantly in recent years, as Haynes noted this is one factor which has been contributing to the continuous decline in the reserves. He added, in the past, Government had been able to bolster the reserves by borrowing on the international market but they have not been taking advantage of this option.
The Acting Governor is expected to conduct a press briefing on the half-year performance of the Barbados economy this afternoon after the conclusion of the Social Partnership meeting.