Aye…a Foreign Currency Problem

Submitted by Wily Coyote

Barbados has been experiencing a significant reduction in their Foreign Currency Reserves over the last several years. The reserves are presently at about 4 weeks, this should be noticeable with shortages of goods within the island, however this is not the case. One would have to ask why this is; a shortage of foreign currency should limit the purchase of imported goods and result in shortages. There are likely several reasons for this to be happening in Barbados with respect to imported goods.

  1. Concessions to large Foreign owned business, Sandals, Cost U Less, Sandy Lane etc. result in no Foreign Currency inflows from these businesses which allow these companies to operate outside currency controls, and
  2. Large retailers domiciled outside of Barbados i.e. Massy, Cave Sheppard, Sagicor etc. have the capacity to purchase their goods outside the controls of Barbados currency regulations and then import their goods…

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  • Rosaliene Bacchus  On 02/24/2018 at 12:47 pm

    Interesting article. I’m sure that Barbados is not unique among small-island economies in maintaining their Foreign Currency Reserves. Multinational and transnational corporations are adept at creating ways to minimize their costs for maximizing profits.

  • Albert  On 02/24/2018 at 3:14 pm

    This happens all the time in different ways. Foreign nationals working locally, and consuming imported goods, may be paid in their home country. Thus their salaries and income (which is foreign currency) never enters the local economy. This may happen with foreign workers on the oil production facilities in Guyana.
    It is more of a problem in Barbados because they need their foreign currency to pay for the imported goods needed in the tourist industry. A relatively large sector of their economy.

  • Mark  On 02/24/2018 at 7:39 pm

    T&T has this same problem—Shortage of US Dollars in the country’s reserves!

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