Government will not tamper with exchange rate, says Barbados PM
Bridgetown, Barbados (BGIS) — The government will not be interfering with the country’s fixed exchange rate, Prime Minister Freundel Stuart has assured, saying that conditions in Barbados today did not justify any tampering with the exchange rate.
Addressing the Barbados Chamber of Commerce and Industry’s luncheon, Stuart told his audience: “The government over which I preside will, through its policy choices, continue to make the preservation of that exchange rate a matter of continuing priority.
“I give this assurance, well aware that this will serve neither as a deterrent nor a discouragement to that small coterie of alarmists who continue to believe in economic witchcraft and are therefore preoccupied with and intrigued by this brand of necromancy.”
He said Barbados took the decision in 1975 to have a fixed exchange rate in relation to the US dollar after delinking from the pound sterling. He stated that for the past 40 years, government had defended this exchange rate.
“We have done so because, in good times and in bad, this exchange rate has served us well. Those who blithely and glibly argue that our currency is over-valued have not been able to show us how devaluation has improved spectacularly the situation of those of our neighbours who have pursued that course. I have certainly heard no argument credible enough to persuade me that it is a course of action to which we should have resorted,” he remarked.
Stuart contended that devaluation was supposed to be a policy response to a “chronic disequilibrium in a country’s balance of payments position”. He pointed out that its rationale is to correct that chronic imbalance by making imports more expensive and exports cheaper.
“Resort to it, however, is not without risk or peril as the venerable economist, Sir Arthur Lewis so discerningly observed,” he indicated.
During his wide-ranging address, he said government was of the view that the state should create an operating environment in which the private sector could flourish with uninhibited vigour.
But, he cautioned that such an enabling environment did not mean there should be no Town and Country Planning Department; no border Customs Officers to ask questions or insist on receiving truthful answers to those questions; or that the Immigration Department should approve every application for work permits or any other status without question.
“The physical development of Barbados must continue to be ordered and the Town Planning Department has therefore to be allowed to do its work efficiently, always operating within the provisions of the law which may govern its operations from time to time.
“The Customs and Immigration Departments are not merely revenue streams but are intimately linked to our national security apparatus and, for countries like Barbados, national security is in addition to everything else, a developmental issue. If you were to remove our sense of national security, all of our economic gains would disappear in short order,” Stuart suggested.
However, he stressed that there was no justification for unnecessary obstacles being placed in the way of the private sector by the agencies named. He insisted that facilitation and the improvement of competitiveness were non-negotiable commitments of the government of Barbados.