Barbados: We will not be forced to devalue our currency – Minister Sinckler

Devaluation not in the best interest of Barbados

Barbados’ Finance Minister Chris Sinckler, last week insisted that the country would not be compelled devalue its currency and enroll in an International Monetary Fund (IMF) program to address the country’s fiscal challenges.

Responding to concerns by President of the Barbados Chamber of Commerce and Industry (BCCI) Eddie Abed about the impact on the economy of recent downgrades, Sinckler said the ratings agencies wanted to push the country towards the IMF.

“They (ratings agencies) would prefer Barbados do an IMF program. While they won’t say that openly but we know that is what they really want.
The problem with that is that an IMF program may get through the staff of the IMF without a currency adjustment or what we call a devaluation, but it is not going to get through the head office or the front office without one. At least I don’t see how that is going to be possible,” Sinckler said.

“We have all agreed that the currency adjustment and devaluation is not, and will not, be in the best interest of Barbados. We simply cannot afford the luxury of having an exchange rate adjustment. So we are at a stalemate. So their position is, ‘you have to get your deficit down’ to what they call management levels – at least at the rate of growth, preferably below the rate of growth, so that it adds no more to the growing levels of debt. The issue is, as we have said in several Budgets, documents and speeches I have made, that our target is to get to that stage. The issue is how quickly do you get there.”

Economy still “fundamentally good”

According to Sinckler, the Central Bank of Barbados 3rd quarter review would be presented in less than two weeks, and in addressing the matter it would present “a comprehensive review of the direction of our economy relative to growth”.

“I say this point with all degree of seriousness because I think it must be said loudly and clearly, our dollar remains stable even in a world of currency volatility and it shall and remain so for several generations to come. Our foreign reserves levels are adequate to defend our currency and will continue to improve going forward. We are confident about that,” he stressed.

Sinckler made it clear he was not burying his head in the sand, acknowledging that the country was going through “a very rough period” and the economy was struggling due to an unmanageable deficit, “unprecedentedly” high debt levels, infrastructure that was under “significant” stress, “uncomfortably high” unemployment, especially among young people, and a “severely challenged” social development services platform.

However, he urged Barbadians not to become dismayed, stating that with a booming tourism industry, strong and well-regulated international business and financial services sector and growing investment in green energy, the economy was still “fundamentally good”.

“There are challenges but we have the basic systems in place well ahead of many other jurisdictions in the world,” he concluded.

Source: Barbados Today