Reducing Government's Interest Costs

Author(s): Central Bank Of Barbados

Created 06 Feb, 2017
Categories Monthly Economic Letters
Views: 22883

"There is only one assured way of reducing interest costs, and that is through the use of monetary policy, combined with a reduction in spending by Government sufficient to balance Government's ongoing expenditure with taxes and other revenues, month by month. Government must also make a plan to reduce and eliminate all arrears in a systematic fashion. These measures will eliminate Government's current, chronic shortage of cash. The Central Bank will then no longer be asked to make financing available to Government to meet its day to day needs, and frees the Bank to use monetary policy to adjust the level of interest rates, which is the orthodox approach used by central banks the world over."

Governor's Economic Letter - February.pdf (854.86 KB)
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