kevin greenidge : barbados, a safe haven in a world of economic uncertainties remarks by dr kevin greenidge, governor of the central bank of barbados, at the eckler annual pension investment conference, bridgetown, 4 december 2023. * * * i am delighted to address this pension investment conference put on by eckler. i understand that it is now becoming a tradition for the central bank of barbados to speak to this grouping at least once a year. i am pleased to build on that convention. you allowed me to choose the topic for today's conversation. i have decided to speak on " barbados, a safe haven in a world of economic uncertainties : the impact on pension funds. " managing the many economic uncertainties is a challenge that pension fund managers across the globe feel acutely. the investment landscape is ever - changing, shaped by domestic and global events and economic shifts. these uncertainties include, on the local front, inflation pressures, low interest rates, shifting demographic trends, and underfunded pension plans. and internationally, volatile financial markets, elevated interest rates, increasing debt burdens, and geopolitical tensions are of great concern to all of us. mitigating these risks requires an understanding of these dynamics, prudent financial management, and a willingness to adapt strategies to changing trends. i will focus my discussion on these risks and how they impact pension funds. but before i get there, i must highlight how the barbadian economy has been performing. the barbados economy has rebounded, registering 10 consecutive quarters of growth as at september 2023. this expansion is seen in all of our economic fundamentals. for the purpose of this discussion, i will highlight the five broad areas of improvement which have the most significant impact on investment outturns, financial stability, and by extension pension fund viability. these include : the debt - to - gdp ratio, our fiscal performance, our external standing, our stable financial sector, and, of course, the strong tourism outturn. our debt - to - gdp ratio continues to fall. as at september 2023, it stood at 115. 4 percent. even though the debt stock is expanding, the robust economic expansion continues to outpace the growth in debt accumulation and is driving down the ratio. as the economy continues to grow, our debt - to - gdp will decline further, and we are on track to reach a ratio of 60 percent by fy 2035 / 36. government met its primary

towards benefits ( and expenses ) and investment losses. we need to fund these gaps given the falling birth rates and increasing longevity risk. i commend the fsc's ( financial services commission's ) efforts to engage the administrators of plans whose funding has fallen below 80 percent and provide evidence that special payments are being made. having looked at the domestic risk factors, i will now examine some global downside risks. pension funds are not immune to the ripple effects that are caused by global political events. whether it's war, political unrest, or changing regimes, there are short and long - term implications for pension funds. those with significant equity or bond holdings see immediate impacts on their portfolio values. liquidity too becomes a challenge because of the difficulty in liquidating positions at favourable prices due to market disruptions. and over the long term, many pension funds are forced to reassess and modify their asset allocation strategies, which impact returns and risk profiles. volatility in the financial markets is another risk that can be a nightmare for pension fund managers. the unpredictability we are witnessing in the equity markets, which are historically a source of higher returns, is causing earnings to fluctuate. for pensions, the long - term trends should matter more than any day to day volatility. this means balancing the quest for higher returns with the need for stability. there has been a noticeable " flight to quality, " i. e. a shift towards safer, more stable investments. while this may protect against short - term volatility, it often comes at a cost to long - term returns. investors gravitate to government bonds, which are perceived to be more stable. however, this increased demand for these assets drives up their prices and pushes yields down. investment managers must balance this trade - off, ensuring both short - term stability and long - term growth. in conclusion, i will outline how pension fund managers can navigate the impact of these uncertainties. as stewards of investor funds, you are responsible to stay informed, agile, and proactive in managing these risks. this means that you have to continue to train and 3 / 4 bis - central bankers'speeches develop your skills so that you can regularly reassess and adjust your asset mix in response to evolving risks and opportunities. how can you change up your assets'portfolio? diversification is key. adopting dynamic asset allocation strategies, i. e. a portfolio management strategy that frequently adjusts the mix