Barbados says no to devaluation of currency
BRIDGETOWN, Barbados (CMC) — The Barbados Government has rejected suggestions that it devalue the local currency, saying it "will do what needs to be done to protect the Barbados dollar".
The Barbados dollar is trading at US$0.50 cents.
Finance Minister Chris Sinckler, in a statement, said that devaluation is not even being considered by the Freundel Stuart Administration as it grappled with efforts to turn around an ailing economy.
Earlier this week, the International Monetary Fund (IMF) said that the local economy continues to "face major challenges, including low growth, a very large fiscal deficit and a high debt burden" .
An IMF mission, which ended a week-long visit to the island, said that real gross domestic growth is expected to decline by 0.6 per cent this year, as slightly stronger tourism activity is offset by the impact of the Government's deficit reduction.
The US-based rating agency, Moody's Investment Services downgraded the island's international ratings.
But Sinckler said the Government is committed to the fixed exchange regime and will do what needs to be done to protect the Barbados dollar.
"Neither the Government nor people of Barbados want a devaluation of the Barbados dollar and, as the Government, we are determined to do what is required to maintain the fixed exchange rate and honour our financial commitments," he said.
"The Government is committed to the programme of fiscal consolidation, and we are seeing major signs of renewed economic growth in Barbados. As a Government and a people, we will stand shoulder to shoulder and overcome the challenges we currently face."
Sinckler said there were a number of projects that could come on stream by year end pumping an estimated US$900 million into the economy.
"In the last six months, the Government has entered into an agreement with a foreign firm for the construction of a US$240-million Waste To Energy Plant (all private equity); Sandals Resorts International is expending $130 million on expanding one of its properties in Barbados, while agreeing with Government to purchase a second property at the old Almond Hotel site, and spend over US$250 million of its own money to rebuild a new 500 room hotel there. With this development, Government will now no longer have to take on debt to finance this operation.
"Additionally, Government has recently approved the sale of the former abandoned 'Four Seasons Resort Project' to a major international investor, and that will trigger another US$250 million in foreign direct investment. All of these projects, plus others, including a new cruise terminal at the Bridgetown Port, are expected to start within the next six months to a year," Sinckler said.