BUSINESS MONDAY - MAINTAIN Fixed exchange rate
BARBADOS born, United States- based educator, Walter Edey, is very much in favour of the country keeping its fixed exchange rate.
In an interview with Business Monday, Edey who was recently on the island, said the present system has worked for this country going back to the 1970s.
His comments came against the backdrop of some people suggesting that the island ought to change the existing rate to give more support to economic sectors.
He said that until there is a productive or skills sector that can export, the fixed exchange rate is best for this country.
“That is why I like the structural idea of releasing only 90 per cent of the inflows and forcing adjustments elsewhere,” Edey pointed out.
He said that given current lifestyles, it is better to control foreign exchange. “The idea that it is just government that controls and spends foreign exchange is a myth,” Edey declared. He pointed out that devaluation, like a stock market, has an emotional component which cannot be determined.
According to him, "All things, all systems, in order to sustain life, unfold as motion, which gives rise to tapestries and structures – otherwise decay sets in. That is a law of physics.
“That said, Barbados has moved from a rural society to a set of townships in sixty years. We have moved from about 220 000 tons of cane in 1967 – and about 3 500 vehicles to 15 000 tons of cane – if we are lucky – and some 140 000 vehicles, I am told.”
He said that this transition reflects growth – and the disruption of old pillars of growth.
“A case can be made that the economy is growing given the size of the untapped informal sector which I am told is about 60 per cent. If one does any assessment of the annual revenue of the vendors located at Warrens, those figures surely define a small business.
“The challenge is to proactively restructure and add mechanisms that will give the desired and recommended economic data. So we are going to focus and develop the informal economy and productive sectors starting with what we have and not what we see others doing,” he added.