BRIDGETOWN, Barbados, Jul 27, CMC – Jamaican hotelier, Gordon ‘Butch’ Stewart’s, Sandals Group will within a few days purchase a Barbados flagship tourism property, Almond Beach Village, for US $53 million.
Reporting on the matter, the Sunday Sun newspaper, hailed the pending transaction for providing a boost to Barbados’ highly stressed foreign exchange coffers.
“It will all be in the form of badly needed foreign currency,” the paper stated.
The property is currently owned by state corporation, Barbados Tourism Investment Inc. (BTI), through which government has been borrowing money from another state entity, National Insurance Service, to keep that premier real estate afloat.
The sale of Almond to Sandals was recently examined by Cabinet and approved by Prime minister Freundel Stuart.
The Sunday newspaper quoted from a note sent to Cabinet by BTI when the purchase was being considered, “It is also worthy of note that Barbados would have been able to convert a Barbados dominated loan facility, namely borrowings from (NIS) and Almond Resorts Inc., which was all in Barbados currency, into United States dollars at a rate of $2 to $1”.
The emphasis on the foreign exchange gain from this anticipated purchase comes against the background of an analysis by international rating agency Moody’s on the perilous threat the Barbados dollar faces if its foreign currency reserve suffers further drops.
“Any further erosion in reserves would likely put further pressure on Barbados’ currency, which is pegged to the US dollar,” Moody’s stated in a July 21 report.
Moody’s added, “After recovering slightly during the previous three quarters, foreign exchange reserves have resumed their decline, and as of 30 June remained around 25 per cent below early-2013 levels,” Moody’s noted.
“This decline occurred despite a slight recovery in long-term private financial inflows that traditionally help support the central bank’s international reserves”.
Half-year figures from the Barbados Central Bank show the foreign exchange reserve falling from BDS $1,219.9 (One BDS dollar = 50 US cents) at the end of June 2013 to BDS $1,093.3 at June 30 this year.