WITH OVER $200 MILLION being spent in the last two years to import cars, a cap on their importation, as well as properly maintaining the nation’s roads, could help save valuable foreign exchange.
According to senior lecturer in economics at the University of the West Indies, Dr Troy Lorde, doing this for a specified period would definitely help to ease the foreign exchange drain.
He however cautioned that any cap would have implications for employment as it would create “upward pressure on the prices of all vehicles because of the artificial scarcity created by the cap”.
His suggestion has come at a time when Barbados’ foreign reserves have nosedived, standing at about eight weeks of import cover or about US$550 million as of September 2017.
Data from the Barbados Statistical Service showed almost 5 000 cars were imported last year with about 10 000 being brought from several countries over the two-year period 2016 and 2017.
Last November during debate on the Road Traffic (Amendment) Bill 2017 in the House of Assembly, it was revealed that there were more than 130 000 vehicles on the roads.
Lorde, speaking to the DAILY NATION, said the broader issue of the road network would also have to be tackled to ensure that the significant foreign exchange spent on importing car parts was also reduced.
“A related drain in foreign exchange is caused by the severe wear and tear which Barbadian roads place on all vehicles, as auto spares such as tyres, wheel rims and suspension parts have to be replaced more frequently than would be normally expected.
“An improved road network would have significant costs up front, but would likely save a lot more foreign exchange in the long run,” he said.
Only last week, Deputy Chief Technical Officer (Operations) in the Ministry of Transport and Works, Philip Tudor, said the island needed to look at creating a more sustainable road network as it spent about $3 million a year on pothole patching.
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