DEVALUATION OF THE Barbados dollar is no longer a remote possibility.
The major reason for this is the Central Bank of Barbados’ (CBB) continuing practice of printing money to allow the Freundel Stuart administration to carry on spending what it is not earning from taxes and investment.
This action allows a government’s fiscal deficit (the difference between its expenditures and revenues) to grow and is often the chief factor that triggers a plunge in foreign exchange reserves, similar to what is happening in Barbados today.
The thing is, the Central Bank knows what it is doing can lead to devaluation of the currency, which at a fixed rate of US$50 cents is No. 3 in the region behind the Cayman Islands and The Bahamas dollars in that order. (SP)
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