Figure 17
Barbados Eurobond Yields
9.00%
8.00%
7.75%
8.09%
7.63%
7.07%
7.00%
6.20%
6.28%
Barbados 7.25%
due 2021
Barbados 7.00%
due 2022
6.00%
5.00%
4.00%
Mar-13
Sep-13
Source: JP MorganChase
Figure 18
Foreign Currency Reserves & Import Cover
Barbados 6.625%
due 2035
Despite the concern over Barbados’ financial position, the
Central Bank Governor has dismissed the suggestion that
IMF intervention would be required. In April 2013, the
Governor noted that “So long as you have foreign exchange
reserves and the exchange rate is secure then there is no
possibility of an IMF program”. Similarly, suggestions that a
devaluation or modification of the currency peg against the
US dollar have been dismissed with the Governor stating,
“The peg protects the real value of national savings. A stable
currency is a strong incentive for investment… and a stable
currency, protected by adequate foreign exchange reserves,
is evidence of Government’s commitment to necessary fiscal
consolidation.”
Outlook:
In October, the Governor of the Central Bank of Barbados
noted that the country’s economic situation is expected
to improve in 2014 with the country’s construction
sector expected to benefit from new tourism related
projects including the cruise pier and other government
infrastructure. Growth of 1.4% is being targeted for 2014.
The central bank also forecast modest real output increases
in tourism and an increase in foreign currency inflows that
could stop the fall in Barbados’ foreign currency reserves.
Furthermore, the economy is expected to recover and expand
from 2015 as major projects begin and initiatives to boost
international competitiveness bear fruit. These initiatives
include “increases in labour productivity, improvements
in service quality, hotel upgrades, development of cultural,
sporting and health services related to tourism, market
diversification, targeted marketing, and upgrades of
infrastructure.”
Source: Central Bank of Barbados
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