3.7 Million loss, HOW? Central Bank of Barbados Releases its 2013 Annual Report
The Central Bank of Barbados submitted its 2013 Annual Report to the Minister of Finance on March 31, as required by law. This year, the report includes a special feature tracing the origins of money in Barbados. The highlights of the report are as follows:
During 2013, the Bank was focused on restoring macroeconomic stability to the domestic economy as a weak performance of the key export sectors together with significantly lower foreign capital inflows constrained economic growth prospects. These developments placed pressure on foreign reserves, triggering a major policy adjustment to contain the erosion of the reserves, sustain the exchange rate anchor, reduce the fiscal deficit and slow the growth of Government debt.
Given the challenges facing the economy, the Bank stepped up its engagement with its publics through the Internet, television productions and presentations by internationally renowned speakers. The Bank’s policy initiatives continued to be supported by its research agenda.
The Bank introduced a new interest rate policy framework, designed to rationalise the process for adjustment of domestic interest rates. The policy permits virtual liberalisation of the minimum deposit rate, apart from ordinary savings accounts of individuals and non-profit organisations. This allows financial institutions to now set other deposit rates, while continuing to set lending rates. The policy also provides for intervention of the Bank in the Treasury Bill market, with the Treasury Bill rate now being used as a basis for determining rates for long term securities, along a notional yield curve which the Central Bank publishes.
The financial system remained stable during 2013 with banks profitable and well-capitalised. The Financial Services Commission, which oversees the regulation of non-bank financial institutions, signed a memorandum of understanding with the Central Bank aimed at strengthening the monitoring of the financial system.
The Bank in conjunction with the Financial Services Commission completed another Financial Sector Assessment Programme (FSAP) which featured assessments of the banking, insurance and credit union industries. The FSAP focused on assessing regulatory compliance with international standards, gaining an understanding of systemic issues and assessing the resilience of the entire financial system to withstand internal and external factors. The assessment was favourable.
The importance of leadership to effecting dynamic changes in the workplace was further emphasized. Seminars, lectures and a national conference were organised with the objective of improving employee engagement, organisational culture and management capacity.
On the financial side, the Bank recorded a loss of BDS$3.7 million for the year 2013. The Bank’s operating costs were largely unchanged, but the continuing weak investment climate for the low-risk securities that the Bank is permitted to hold continued to depress income. The Bank is reviewing options to contain expenditure over the medium term.