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Sancho Panza

Barbados Faces ‘Significant’ Risks To Economy, Imf Says

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Bloomberg 12/1/14

'Barbados needs to act quickly in laying off government workers and freezing wages to stem a decline in foreign reserves as tourism numbers falter, the International Monetary Fund said. The Caribbean island’s debt reached 94 percent of gross domestic product in September, up from 60 percent in 2009, the IMF said in a report today. The economy shrank 0.7 percent last year and has contracted an average of 0.6 percent per year since 2008. While the government has begun firing 3,000 state workers to cut costs, the economy faces headwinds that could result in a crisis, according to the IMF.

“Downside risks are significant, and strong and prompt adjustment is crucial,” the Washington-based lender said. “The authorities face the challenging task of raising foreign reserves and reducing the fiscal deficit in an environment of low growth, high debt and a fixed exchange rate.”

Barbados’s debt challenges are echoed across much of the Caribbean, where governments are struggling in the wake of the global financial crisis to boost growth and control debt burdens. Since 2010 at least five nations, including Belize, Jamaica and Grenada, have defaulted.

Barbados dollar bonds have lost 8 percent over the past year, compared with a 2.6 percent loss for Central American and Caribbean debt, according to JPMorgan Chase & Co.’s CACI index. Yields on the country’s 2022 dollar bonds have climbed to 9.93 percent this week from 6.27 percent a year ago.'

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Bloomberg 12/1/14

'Barbados needs to act quickly in laying off government workers and freezing wages to stem a decline in foreign reserves as tourism numbers falter, the International Monetary Fund said. The Caribbean island's debt reached 94 percent of gross domestic product in September, up from 60 percent in 2009, the IMF said in a report today. The economy shrank 0.7 percent last year and has contracted an average of 0.6 percent per year since 2008. While the government has begun firing 3,000 state workers to cut costs, the economy faces headwinds that could result in a crisis, according to the IMF.

"Downside risks are significant, and strong and prompt adjustment is crucial," the Washington-based lender said. "The authorities face the challenging task of raising foreign reserves and reducing the fiscal deficit in an environment of low growth, high debt and a fixed exchange rate."

Barbados's debt challenges are echoed across much of the Caribbean, where governments are struggling in the wake of the global financial crisis to boost growth and control debt burdens. Since 2010 at least five nations, including Belize, Jamaica and Grenada, have defaulted.

Barbados dollar bonds have lost 8 percent over the past year, compared with a 2.6 percent loss for Central American and Caribbean debt, according to JPMorgan Chase & Co.'s CACI index. Yields on the country's 2022 dollar bonds have climbed to 9.93 percent this week from 6.27 percent a year ago.'

I believe Virgin began reducing the number of jumbos it flies to the Caribbean a couple of years ago preferring the A330 instead, presumably because of declining passenger numbers.

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