Tuesday, April 16, 2024

Stability, growth key concerns

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After recording a $3.7 million loss last year, the Central Bank of Barbados says it is “reviewing options to contain expenditure over the medium term”.
While announcing the release of its 2013 annual report, the financial institution said its operating costs “were largely unchanged, but the continuing weak investment climate for the low-risk securities that the bank is permitted to hold continued to depress income”.
The bank said it submitted the report to the Minister of Finance last week as required by law, pointing out that this year the document included “a special feature tracing the origins of money in Barbados”.
“During 2013, the bank was focused on restoring macroeconomic stability to the domestic economy as a weak performance of the key export sectors together with significantly lower foreign capital inflows constrained economic growth prospects,” the organisation said.
“These developments placed pressure on foreign reserves, triggering a major policy adjustment to contain the erosion of the reserves, sustain the exchange rate anchor, reduce the fiscal deficit and slow the growth of Government debt. The primary tool of policy was fiscal consolidation, reflected in increased taxation and expenditure-reducing measures.
“At the same time, the bank continued to encourage the revitalisation of economic activity through growth in the tourism, agro-processing, international business and financial services, and alternative energy industries.”
The bank also said that given the challenges facing the economy, it “stepped up its engagement with its publics through the Internet, television productions and presentations by internationally renowned speakers”.
“The bank’s policy initiatives continued to be supported by its research agenda. The bank introduced a new interest rate policy framework designed to rationalise the process for adjustment of domestic interest rates. The policy permits virtual liberalisation of the minimum deposit rate, apart from ordinary savings accounts of individuals and non-profit organisations,” it noted.
According to the organisation, such a policy “allows financial institutions to now set other deposit rates, while continuing to set lending rates”.
This policy also “provides for intervention of the bank in the Treasury Bill market, with the Treasury Bill rate now being used as a basis for determining rates for long-term securities, along a notional yield curve which the Central Bank publishes”.
Regarding Barbados’ financial system, the bank said it “remained stable” last year with the banks it regulated remaining profitable and well-capitalised.
The regulatory body listed the complete overhaul of the design of Barbados’ bank notes for the first time in 40 years as one of its significant achievements in 2013. (SC)

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