Barbados foreign reserves decline by $60M

The foreign reserves of Barbados declined by $60 million in January, despite the record number of tourist arrivals, Opposition spokesman on Finance and Economic Affairs, Clyde Mascoll, said yesterday. He told the Daily Nation this performance was not a good sign, and required some explanation from Minister of Finance Chris Sinckler.

Sinckler responded on Wednesday night, saying Mascoll was being “neither intellectually nor practically genuine on the matter”.

“Mascoll must know it was the former administration that entered into an agreement to make a $30 million payment for the Dodds Prisons at the end of every January. “In addition, there are debt payment commitments that government has around this time of year, which when taken together account for more than 90 per cent of the reserves of which he speaks,” the minister of finance said.

Mascoll had said that according to the Barbados Tourism Authority, 52,685 visitors came here in January 2011 – an 8.7 per cent increase over January 2010 – mainly due to a $6 million hike in advertising and increased airlift. “The poor performance of the foreign reserves in January reinforces my original comment that the sale of the National Insurance shares in the Barbados Light & Power (BL&P) company had more to do with the foreign reserves than with concerns about the needs of the country’s public sector pensioners in the future,” Mascoll said.

Mascoll had charged: “It is also now very evident that the growth of tourist arrivals in January was not matched by commensurate growth in spending by the tourists. Further, there was significant discounting of room rates during the country’s high season.” The economist and former minister of state in the Ministry of Finance in the Owen Arthur administration said the major contribution of the increased arrivals to the tourism sector might come in the value added, that is, economic growth.

“However, the contribution to growth depends on the performance of the United Kingdom market, from where we get longer-staying tourists,” he added. Sinckler said Mascoll was “misleading the public” by suggesting that tourism receipts from visitors arriving in January and early February could show up during the same period.

According to Sinckler, Mascoll was “retaining some strange pleasure out of his desire to prove that the Barbados economy is going to collapse”.

He said that for Mascoll to create the impression that “there is some urgent crisis in the foreign reserves of Barbados is not only unwarranted but irresponsible”. The minister told the Daily Nation that the country’s reserves “remained comparatively stable, providing 20 weeks of import cover, which is above international standards”.(Excerpt from Daily Nation)