Barbados dollar not at risk - UWI lecturer
BRIDGETOWN, Barbados - FOLLOWING a comment in defence of the Barbados dollar by a prominent economist one week ago, another has stated that the currency is safe, with the greatest risk being speculation on a devaluation.
"Barbados is not in any danger of devaluation," Dr Don Marshall said on Wednesday, but warned, "It is important to get the bogeyman out in the open because of the deleterious
effects that a whisper campaign can cause".
Marshall, director of the Sir Arthur Lewis Institute of Social and Economic Studies at the University of the West Indies, Cave Hill campus, likened persistent rumours of a pending devaluation to what is happening in Argentina, which he said is in a "vicious cycle of inflation, high unemployment and devaluation".
"It [Argentina] is facing this kind of dilemma because of a whisper campaign, and the whisper campaign manifested itself in capital flight...and in the best of circumstances where your economic fundamentals are fine, or in some case are reasonably fine, what happens is that you get an undermining of the local currency," Marshall said.
Contending that the island has enough foreign reserves to ensure no international debt goes unpaid -- a yardstick for devaluation -- he said it is a waste of time discussing a devaluation of the Barbados dollar.
Last week, Opposition spokesman on Finance Dr Clyde Mascoll said, "In spite of the fact that we were having a fiscal crisis problem, and we continue to have one; in spite of the fact that our economy has not been growing for the last six years; in spite of the fact unemployment has been rising, the one economic indicator in Barbados that was positive for the last six years was the adequacy of the foreign reserves at the Central Bank."
The Central Bank reported that as of March 2014, the island's foreign reserves stood at BDS$1.1 billion (US$550 million), which covers 16 weeks of guaranteed payment for imports.