BRIDGETOWN, Barbados--Tourism is not performing as predicted and as a result foreign reserves are falling.
This has been revealed by Harold Codrington, advisor to the Governor of the Central Bank of Barbados.
"At this time of year we should not be losing foreign reserves, because this is the high season for tourism," the economist told the Men's Education and Support Association (MESA) on Wednesday night at The St Michael School.
"If the economy is losing foreign reserves, that means something is dreadfully wrong: tourism is not performing," Codrington added.
"Some people were predicting that tourism would have picked up in the winter season of 2009 into 2010, but it hasn't done that. So it is a hard time for tourism," said Codrington as he explained the various methods used to measure the performance of the sector.
"The international standard is, if you want your country to be taken seriously, it should have enough reserves to cover at least three months of imports. Right now we have about 21 weeks of imports.
"We don't want that to fall, because the more it falls, the more we attract attention from rating agencies such as the World Bank and the IMF. And we don't want that!"
Codrington identified foreign investment as a major source of development for Barbados. "When foreign investment declines, we are in big trouble; and this happened last year."
Codrington said there were two main activities that attracted foreign investors to the island.
"One is the high-end tourism activity, especially on the West Coast with the big houses down there. Investors come in and buy out chattel houses for B$100,000 . . . [knock them down] and put up big buildings for B$10 million. You would not believe it if I showed you some numbers.
"The other activity that has attracted some foreign investors," the economist said, "would be the international financial services.
"[Those] would be the two main categories that we have been able to identify."
