DeLisle Worrell: The strength of Barbadian institutions and the resolve of
Barbadians will see us through the crisis
Op-ed article by Dr DeLisle Worrell, Governor of the Central Bank of Barbados, 15 August
2013.
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Barbadians have every reason to be confident that we can cure the foreign exchange
imbalance which has emerged in the last three months, and revive the growth of our
economy. First, we have the highest standard of living in the Caribbean, and we have earned
it by transforming the economy and investing in infrastructure and human resources, over
many decades. Figure 1 compares the Human Development Index (HDI) for Barbados with
the rest of the Caribbean. The HDI is the best indicator of the quality of life available for
countries worldwide.
Second, Barbados has strong institutions for decision making: our social partnership is the
envy of countries worldwide; our economic information systems are the equal of many
industrial countries; our media are knowledgeable; and we have a strong mechanism for
putting policy into effect. Thirdly, we have preserved the value of our dollar, protecting the
value of people's savings, and providing more predictable returns for investors. Fourthly, we
have reserves which are more than sufficient to ride out the storm, as may be seen in
Figure 2.
With these resources we may confidently address the challenges, which are twofold. The first
is to balance foreign exchange inflows and outflows. Following the June 27th Economic
Consultation, Government is in discussion with the social partners on measures that will be
introduced to reduce the fiscal deficit. The required adjustment is considerable, about 4.5%
of GDP, but not sufficient to cause major social disruption, as may be seen in Figure 3. The
adjustment will protect the value of our currency, which is vital to Barbados' economic
prosperity. Figure 4 shows how the Caribbean countries which have devalued have fared,
compared with those that have maintained an unchanged value of their currency in terms of
the US dollar.
Economic growth is the second challenge. The social partners continue to pursue actions to
revive the economy. Investment amounting to $2.3 billion is in prospect for the foreign
exchange sectors, and Government contemplates $1 billion of infrastructure and other
projects. Initiatives are underway to improve access to finance by small and medium
enterprises. Labour is charged with an urgent need to improve productivity and quality of
service in every area of activity, so that Barbados becomes a byword for excellence in
service.
It is all about self-confidence. The social partners know what we must do to grow the
economy, and each and every Barbadian must remind ourselves that we have the power to
contribute to our future prosperity. The private investment projects that will grow the
economy are known, the government infrastructure has been identified, the financing is being
put together, and the fiscal correction package is being stitched together in meetings
between Government and the other social partners. What remains is the piece that is up to
each and every one of us, that is, to increase worker productivity and commitment to
excellence. I am confident that we will each resolve to put our best efforts into playing our
part in the revival of our economy, and to sustainable economic growth in the future.
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