Barbados records decline in foreign reserves during first half of 2017

Taken from wikipedia.org

BRIDGETOWN, Barbados, Aug 12, CMC – The Central Bank of Barbados (CBB) says that at the end of June, the island’s international reserves fell to BDS$635.5 million (One Barbados dollar =US$0.50 cents), which was equivalent to an estimated 9.7 weeks of imports.

In a review of the performance of the island’s economy over the past six months, the CBB said that the decline in the foreign reserves, which was on par with the corresponding period in 2016, reflected in part a weaker external current account balance over the first six months 2017, as higher international oil prices contributed significantly to a 44 per cent increase in the value of imported fuel.

It said in addition, retained imports of consumer goods and capital goods increased by an estimated 1.8 and 7.3 per cent respectively.

The CBB said that the financial account recorded a surplus of BDS$119.5 million for the first six months of 2017, which was BDS$66.5 million greater than that of the same period last year.

“This outturn is largely the result of lower net long-term public sector capital outflows relative to the first half of 2016, when Barbados made its capital subscription to the Development Bank of Latin America (CAF). On the other hand, net long-term private sector inflows of $227.0 million were virtually unchanged compared to the corresponding period of 2016.”

In its review, the CBB said that the financial system here remained stable and liquid during the first half of 2017.

It said while excess cash holdings of commercial banks remained high at almost 16 per cent of domestic deposits “however, following the decision of the Central Bank to tighten its monetary policy stance by raising the securities reserve requirement ratio of commercial banks from 10 to 15 per cent of domestic deposits, the excess securities ratio fell to seven per cent”.

The CBB said that as at mid-year, growth in bank credit to the private sector remained sluggish at one per cent due to increased lending to individuals and the wholesale and retail sectors.

“The growth in mortgages for private dwellings slowed but overall household credit expanded as a result of higher borrowing by way of consumer loans. The improvement in the nonperforming loans ratio continued, reaching 8.7 per cent as at March 2017”

The bank said interest rates remained relatively stable during the first half of the year as the weighted average loan rate and the weighted average deposit rate were largely unchanged. The Treasury bill rate continued to fluctuate within a narrow band and at end June was 20 basis points higher than at the end of 2016.

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