PM: No devaluation!

There will be no devaluation of the Barbados dollar.

 

That assurance has come from Prime Minister the Rt. Hon. Freundel Stuart, who maintained that the devaluation of the Barbados dollar was not an agenda item for his Government.

 

Yesterday, in an address which lasted just over 45 minutes, he told those attending the Barbados Chamber of Commerce and Industry’s first business luncheon for the year, that devaluation is not the only solution to the “adverse movements” in respect of the country’s foreign exchange or foreign reserves situation. Furthermore, he contended there is no “persuasive evidence” to suggest that devaluation exercises in other CARICOM countries have produced any spectacular results, or facilitated the outcomes that were desired.

 

“As I said to the Chamber on January 28, 2015, devaluation is supposed to be a policy response to a chronic disequilibrium in a country’s balance of payments position. Its rationale, I explained then, is to correct that chronic imbalance by making imports more expensive and making exports cheaper. And, as I concluded then, objective conditions in Barbados today do not justify any tampering with our exchange rate,” he told the audience.

 

Moreover, he ruled out suggestions that the country should seek assistance from the International Monetary Fund (IMF), adamant that there is no need at this time to seek balance of payments support from the international agency. He further made it clear that as far as Government was concerned, the present circumstances in the country did not warrant a “panicky resort” to the IMF. However, he acknowledged that they do require close attention.

 

Stuart made the point after reflecting on the current state of the economy. Referencing the report issued by the Governor of the Central Bank earlier this week, he noted that there was no inflation, the retail price index fell by 0.8 per cent and unemployment declined to 10 per cent in 2016. He added that this country’s real growth for 2016 was estimated at 1.6 per cent.

 

In respect of the traded and non-traded sectors, the country’s leader said both recorded growth in the region of 1.7 and 1.5 per cent respectively. The Prime Minister noted that real growth in the traded sector is being led by tourism and in the non-traded sector by construction. But, he stated that in spite those successes, the country has continued to wrestle with a still too large fiscal deficit.

 

Meanwhile, touching also on the topic of privatisation, which some persons are suggesting is needed, PM Stuart made it clear that Government’s policy on this issue has remained unchanged. 

 

“In a mixed economy, the Government must continue to play a role in the provision of goods and services for purchase by individuals, and will continue to invest in and promote the production and distribution of such goods and services.  Government does not intend, however, to continue to support public enterprises which are not producing strategic goods and services where those enterprises are an unnecessary charge on the public finances,” he indicated.

 

He said then that in the extreme case where complete divestment is the appropriate course of action, it will be taken. But, he maintained that it cannot be with “improper haste” where the asset to be leveraged is thought to be strategic, and could have a potentially widespread social impact. (JRT)