Jun 2010 Financial News

Central Bank urges Barbadians to complete survey

Jun 09, 2010

WITH the July 16 deadline for the completion of the Balance of Payments (BOP) survey fast approaching, the Central Bank of Barbados (CBB) is making an effort to remind Barbadians about the importance of collecting data.

In a release to the public, the CBB stated that the accumulation of foreign exchange is critical to the Barbadian economy, noting that foreign exchange earned from tourism, financial and other business services, and, to a lesser extent agriculture and manufacturing, is essential to finance the country’s everyday needs.

They made the point that the management of economic policy, therefore, requires that an accurate record of the balance of external payments and receipts is kept to ensure that the underlying demand for imports does not exceed foreign receipts in the medium term.

In this context, the annual BOP survey that is currently being concluded is vital, as it provides the input data needed to measure the balance of external payments.

Previous data collected between 2004 and 2008 indicate that the tourism sector is by far the most important source of Barbados’ foreign exchange earnings, contributing an average of 52 per cent of earnings during the period.

This was followed by manufacturing, which contributed around 11.1 per cent, and international business services, which contributed 3.5 per cent.

Foreign exchange earnings from agriculture, mainly sugar, have been reduced now to only 1.3 per cent of the total volume of foreign exchange earnings for the four year period.

As it relates to the areas responsible for the largest portion of foreign exchange expenditure during the period, the national fuel bill was seen to be the single largest category, representing 21 percent of imports.

Together, the three largest categories – fuel, machinery, and other imports – made up 53 percent of total imports, while discretionary spending on items such as motor vehicles, clothing, and furniture, only accounting for 3.2, 2.1, and 1.6 percent respectively of the total import bill.

The data is also used to compare Barbados with its neighbours in the Caribbean, in terms of their ratio of export to imports.

The data for 2004 to 2008 showed that the ratio of foreign exchange inflows plus outflows is 100 percent or more for Barbados and other small economies, in contrast to relatively large economies such as the US and the UK, where the ratio is 50 percent or less.

“Because of its oil and energy exports, Trinidad and Tobago records a large current account surplus, but Barbados, like other Caribbean countries, tends always to be in a deficit, averaging 7.9 per cent over 2004 to 2008”, the Central Bank release explained.

It said that as in the case elsewhere in the Caribbean, the current account deficit is financed mainly by net inflows of FDI, averaging 4.8 per cent during the 2004 to 2008 period.


Source:
Barbados Advocate
Wednesday June 9, 2010

http://www.barbadosadvocate.com/newsitem.asp?more=business&NewsID=10728