The claim that there is a restriction by the Central Bank of Barbados on the amount of foreign exchange allowed to leave the country is true, says accountant David Simpson.
On Tuesday, Minister of Commerce and Trade Donville Inniss denied the allegations made by Leader of the Opposition Mia Mottley during debate in the House of Assembly on a bill to raise Government’s loan limit. Inniss accused Mottley of making reckless and unpatriotic statements, which he warned could further jeopardize the Barbados economy.
However, speaking during the First Citizens Investment Services Market Outlook Panel Discussion at Frank Collymore Hall yesterday, Simpson, immediate past president of the Institute of Chartered Accountants of Barbados (ICAB), said the allegations were in fact true, describing the denial as “a worrisome trend”.
David Simpson
“I heard some denial from one Cabinet minister this week, but I have experienced it and one or two of my clients have as well,” said Simpson.
“I am told it’s the enforcement of an old policy that has been there in terms of getting tax clearances and so on before foreign exchange can be released from the country, especially in terms of remittances and [making] certain external payments, whether to suppliers or otherwise. I know the Government has denied that this week, but I can tell you it is the case, which suggests there is still some concern in terms of the foreign exchange reserves,” added Simpson.
He said it was also true that “there are some entities, whether intentionally or by virtue of the model of their business, where a lot of the foreign exchange being earned by local companies is actually being held outside of Barbados”.
Questioning the level of foreign exchange that was actually in Barbados, Simpson added: “I am not certain as to where we are with our foreign exchange position.
“The Moody’s report suggests that our foreign exchange reserves are stable, which to me it means that it has not really moved since the beginning of the year when we had that influx of $300 million from the Credit Suisse loan. I interpret that to mean that whatever we earned from our tourist season for the past three or four months has gone back out in expenditures and we have not seen any growth in the reserves,” added Simpson.
He also questioned the Government’s decision to pursue a sovereign debt, saying it would create a fixed cost, while suggesting that the projects that debt would be applied to should bear revenue to service it.
“The question then is if we are not getting any significant returns from, for example, the West Coast Sewerage Project, the new sugar terminal, expansion to the airport and so on, we would just be digging ourselves in a deeper hole,” added Simpson.