BARBADOS’ EXTERNAL FINANCING is no borrowing from “Peter” to pay “Paul” syndrome, Central Bank Governor Dr DeLisle Worrell makes clear. It is, he says, a calculated strategy to balance foreign reserves and the current account deficit.Worrell was outlining the position of the Central Bank of Barbados at last week’s annual general meeting of the Barbados Economics Society at The Savannah Hotel, Hastings, Christ Church.“Borrowing is a good thing, if you use it for the right purposes. In general we expect when we look at our balance of payments that we just have a deficit on the current account by capital inflows; negative capital inflows would be for disrupture and positive capital inflows would be for investments in tourism and tourism related activities, and so on,” he told Barbadian financial analyst Jeffrey Brathwaite, who asked him why Government appeared to be borrowing from one institution, such as the International Monetary Fund (IMF) to repay another like the World Bank.Worrell, who was the keynote speaker on the topic What’s Wrong With Economics explained: “Because of the impact of the global recession we have had a deficit in our foreign exchange earnings, which we expect to be temporary, we expect tourism to recover and we expect our earnings will come back up, so that part of our borrowing strategy for this year is to fill that gap and it is not borrowing from the IMF or World Bank.“There is a certain amount of external borrowing that matures this year and we said that rather than use our reserves, which we may need in case the recession prolongs over and beyond what we expect, it makes sense to borrow.”The Central Bank Governor noted that Government had failed to take the leap into the present volatile international financial market to float a US$200 million bond – half of which was to be used to repay an existing loan and the other portion to boost foreign reserves – that was planned for the middle of this year.
(SR)
