UPDATED November 5, 2013
Preparing the population for devaluation?
Once again there are calls for Barbados to devalue its currency – this time from the Inter-American Development Bank.
There’s talk on the radio and in some of the local rags. How will devaluation impact me? Will more tourists come? Will imported food go skyrocketing or will homegrown food crops rise again?
I don’t trust anybody anymore. I just know that things are not going to get better anytime soon. Here’s what Marcus wrote about this time last year…
Original article published October 31, 2012…
Devaluation: How would it impact me?
“To most of us in the Caribbean, it does not seem rational to impoverish yourself to grow your economy. To us, it is obvious that is what devaluation implies. The point is not so obvious to Americans and Europeans.”
… Dr. DeLisle Worrell, Governor of the Central Bank of Barbados
We’ve been saying for several years that things are not getting better, and that the future on Bim isn’t pretty. The best and brightest of our young people regularly pack their bags for the USA and the UK if they are at all able – and who can blame them?
Want to know what the future will bring? Have a look at what your Members of Parliament are doing. Duguid is headed for Canada. Donville Inniss family maintains property, business and finances in the USA. Those gentlemen aren’t stupid, you know.
Bajans have been living high – way too high for our productivity. That’s true for us as individuals and it’s true for the country. Now those chickens are coming home, and they are some thin chickens.
An interesting press release by the Central Bank of Barbados that we haven’t seen in any of the local papers. Did we miss it?
It seems obvious that Bim is now under some pressure from the IMF and others to devalue our dollar that is currently pegged to the US dollar at two for one.
Should we devalue? What does that mean for me? What does that mean for my children?
“What good will devaluation do if we don’t address the lack of productivity, the degrading tourism environment and the prevalence of corruption in public service?”
Sometimes there isn’t an easy way out…
Central Bank of Barbados : Press Statement
The issue discussed at the breakfast meeting with the Managing Director of the International Monetary Fund and the President of the World Bank was whether devaluation was beneficial for small economies. Madame Lagarde was of the opinion that a devaluation of the Barbados dollar would make our tourism more competitive and help our economy to grow. To most of us in the Caribbean, it does not seem rational to impoverish yourself to grow your economy.
To us, it is obvious that is what devaluation implies. The point is not so obvious to Americans and Europeans. In a recent publication that was distributed during the Annual Meetings in Tokyo, I try to explain why things appear so differently from the point of view of small open economies (See my article at www.group30.org).
The Caribbean values very highly the opportunity that the International Monetary Fund and World Bank provide us, to air our concerns in frank and open discussion. In correspondence after the breakfast meeting, I reassured Madame Lagarde that, like my colleagues in the region, I am highly appreciative of the initiatives that the International Monetary Fund and the World Bank have undertaken to focus on the concerns of the Caribbean and other small nations. Madame Lagarde sent a gracious response confirming her commitment to the ongoing relationship. The dialogue between Barbados and the International Monetary Fund is continuous, and there are several opportunities each year for face-to-face contact with International Monetary Fund staff, including at the Annual Meetings.
Our aim at all times is to arrive at a full understanding of Barbados’ circumstances, and of the options open to us. We engaged in discussions with the International Monetary Fund towards this end in Tokyo, and that dialogue continues. The breakfast meeting of the Managing Director of the International Monetary Fund and the President of the World Bank is a private meeting with Ministers of Finance and Governors of Central Banks of the Caribbean, at which no press are present and no record is taken for public circulation. It is unhelpful if such private exchanges, offered in the search for better understanding among the parties, are made public, creating an impression of conflict where none exists.
Dr. DeLisle Worrell, Governor of the Central Bank of Barbados