AT RISK: Growing uncertainty in banking, int'l business sector
Gregory McConnie, President of The Barbados International Business Association (BIBA).
President of The Barbados International Business Association (BIBA), Gregory McConnie, says the lack of clarity of the recently announced Budget measures has created a measure of instability in the business community.
He surmised that the two per cent charge on foreign exchange transactions could be harmful to the competitiveness of international business operations, more so since they are not sure how it will be applied.
Speaking under the topic of 'De-risking in the Commercial Banking Sector' at The Barbados Chamber of Commerce and Industry (BCCI) and BIBA’s Breakfast Panel Discussion on Wednesday morning, the BIBA President said that competitiveness and attractiveness of Barbados as a place to carry on business continues to be eroded by the challenges the country has with the ease of doing business.
“This has been exacerbated by the significant impending budgetary tax increases that we expect would almost certainly drive inflation to near double-digit levels and is most likely to have a shrinking impact on the economy,” he emphasised.
McConnie said there has been a lack of clarity regarding the application and scope of the measures, “and even though it has been two weeks since the measures were announced we are still waiting on how particular aspects of them will be implemented.”
Concern about a lack of clarity was also expressed by fellow panellist, economist Jeremy Stephen.
He said no consideration was given in the Budget to the issue of de-risking and how it affects not just the banking sector but also the international business sector.
According to Stephen, what is concerning is that the levy is to take effect on July 1 but the process for implementation is unknown, which he said is “a clear disregard for the whole effect of de-risking”.
“We have domestic policies that are not paying attention to a lot of these external policies. Suppose all the banks had to be de-risked in Barbados? Now you have a compounded issue where you still need to use US dollars on a credit card, but to purchase something out of Europe you have to pay a two per cent fee but you are not certain if the transaction will clear,” Stephen argued.
However, fellow panellist, Legal Counsel at the Central Bank of Barbados, Sadie Dixon, gave the assurance that de-risking issues are being addressed at the highest level among regional states.
Panellists at the BCCI/BIBA Breakfast Discussion on De-risking in the Commercial Banking Sector.
Moderator, economist Ryan Straughn, said what is needed is for Government to implement a proper framework and policies, noting that it is time for them to become more engaged and address this issue.
According to the World Bank, “De-risking practices by global financial institutions threaten to cut off access to the global financial system for remittance companies and local banks in certain regions, putting them at risk of losing access to the global financial system.
“If the current trend continues, people and organisations in the more volatile areas of the world or in small countries with limited financial markets could be completely cut off from access to regulated financial services.”