Barbados has fairly healthy foreign exchange reserves at $1.56 billion and the figure is expected to grow even more in the coming months, which will come in handy for a “rainy day”.
Prime Minister Mia Amor Mottley made the comments in the House of Assembly yesterday evening, while outlining the state of the economy, as she wrapped up the debate on the Appropriation Bill in the House of Assembly. According to Mottley, when her party assumed office, reserves accounted for only five weeks of import cover; Government now has five and a half months.
“That reserve cover for a rainy day allows us to be able to plan out the package that I would want to announce here today, the Phase One package. Because if we didn’t have it, I wouldn’t be able to have the flexibility to do the things that we are now about to do to help save the Barbadian people as we go into this woeful and awesome crisis,” she said.
The Prime Minister’s comments came as she said that the Inter-American Development Bank, just a week ago, agreed to a sustainability policy-based loan for $160 million. She indicated that those funds will come into the island over the next few weeks to further boost the import cover and provide more flexibility. Mottley went further, revealing that under the International Monetary Fund’s Enhanced Fund Facility, they will get $200 million Barbados dollars on top of the $440 million allocated in the original programme.
“What that means, and they have given us the flexibility of treating first as reserve cover, but using it also for budgetary support should we need to do so later. But the bold result of that is that on top of the $1.56 billion, we are likely to be able to have access, within the next four to eight weeks, the sum of $360 million, making sure that we move from five and half months of import coverage to literally, Mr. Speaker, about 27 weeks, which is the equivalent of six and a half months roughly, almost seven months of import cover,” she said.
The PM, who is also the Minister of Finance, Economic Affairs and Investment, told the Lower House that not only are the reserves up, but there has been a significant reduction in the country’s debt. She indicated that it dropped from 176 per cent debt-to-GDP ratio to 118.8 per cent and she gave the assurance that they are committed to bringing down the debt further to 60 per cent by 2033. She spoke also of the effort to reach the six per cent primary surplus target this financial year.
“Today as I speak to you, with just 11 days to go to the end of this fiscal year, we are recording a primary surplus of 5.7 per cent or $597.5 million, well on the path to hitting it. But it is at that point that we would soon start to deviate, because there is no glory in hitting targets and people suffering; there is no glory in telling people that you passed an exam and people can’t eat; there is no glory in being viewed as stellar, and pain and suffering is about to ensue in too many of our households and families,” she stated.
PM Mottley spoke to this while painting a complete picture of the economy with reduced expenditure and an increase in revenue. In respect of the latter, she said that for the first 11 months of the financial year, the figure stands at $2.6 billion, $91 million more than for the same period last year. (JRT)