The Central Bank of Barbados issues New Monetary Policy


Created 30 Jan, 2004
Categories General Press Release
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Standard and Poors has maintained Barbados' foreign currency and local currency outlook at "negative" in their Release of January 30, 2004.

This was the same outlook given to Barbados in their August 2003 report though the domestic outlook carried the headline "Long-Term Local Currency Rating Lowered to A+; Outlook Negative".

In explanation for maintaining this outlook, Standard and Poors has stated that "Fiscal problems are at the heart of credit weaknesses in Barbados and the Republics of Costa Rica and Panama, and each of these governments has reduced fiscal flexibility due to their choice of inflexible foreign exchange regimes."

The Central Bank however differs from this position. The Bank notes that the fiscal deficit has improved from 5.9% of GDP in 2002 to 4.5% of GDP in 2003 and is expected to further lessen to be 3.5% of GDP in 2004. In addition, Barbados' foreign exchange reserves are at historically high levels and its external debt service ratio has remained stable in 2003 and is projected to decline in 2004. Further, the Bank is of the view that the stability of the Barbados economy in the past few decades can in fact be partly attributed to its fixed exchange rate regime. The Bank views this as an advantage.



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