Central bank governor DeLisle Worrell explains how Barbados has managed to emerge from the global financial crisis stronger and economically more diverse
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It’s hard to miss DeLisle Worrell when he enters a room. The governor of the Central Bank of Barbados (CBB) is a striking but calming presence – exactly what is needed in a small but stable island economy emerging with a new sense of purpose after a few relatively lean years. His chosen attire, which includes a perfectly ironed Nehru-style shirt, points to his humility; his broad, knowing grin to a charm that sets visitors immediately at ease.
His cool demeanour hides the fact that it has been a tough few years for probably the region’s most diverse and well-run island state. Barbados has been here before, knocked back several times by recessions, notably in the early 1990s. But the recent financial crisis felt different: Barbados hit its low point in 2009, as the two industries that buttress its economy, tourism and international business and financial services, both took a pounding.
That Barbados has been able to emerge from the shadows stronger and more economically diverse, while retaining the political, structural and social stability that define it in the eyes of the investing world, is testament to the resolve of the Barbadian people. It also points to the extraordinary determination and intellectual elasticity of the island’s leading financial and political figures, including Worrell, who has led the CBB since November 2009.
He previously worked as deputy governor between 1990 and 1998, before joining first the International Monetary Fund, where he served as an advisor in the Monetary and Exchange Affairs Department, then the Caribbean Centre for Money and Finance. Since rejoining the central bank as governor, he has helped stabilize the economy following the dark days of the financial crisis.
The economy has posted modest growth figures since 2009. Worrell has succeeded in keeping prices low and the debt burden manageable, while shoring up foreign exchange reserves and boosting revenues in sectors from transport and distribution to financial services to agriculture - no small feat for a small, natural resource-poor island economy.
Product sells itself
Worrell clearly enjoys his life and his job. Asked whether he is an optimist or a pessimist about the future of the Barbadian economy, he smiles and spreads his hands wide. "I’m cautiously optimistic," he says. "I’m a big believer in the product selling itself. Look around you. We’re blessed with our physical environment, with our beaches, with all the great things that make living and working here wonderful. We have a strategy that works for us – we have built on our reputation and our competitive strengths. And we have excellent physical and social infrastructure – great roads, telecoms services and utilities, along with the best education and healthcare systems in the region."
| Dr. Delisle Worrell, Governor, |
Central Bank of Barbados
At first glance and in many ways this future looks remarkably like the past. Barbados’s economy remains heavily dependent on the twin engines of tourism and international business services, two sectors that often intersect. The island is home to hundreds of global institutional investors and corporations, all looking for ways to minimize their tax spend (and finding them) thanks to the island’s double-taxation agreements with 33 nations, including the United States and stretching from Canada to China, Sweden to Switzerland, and Britain to Bahrain.
Directors of these firms and funds flock here throughout the year, but most notably in the winter months, to hold board meetings, to talk to their lawyers, accountants, auditors and business partners, to check up on their savings plans, and to channel capital parked profitably in Barbados into new local, regional and global investments and jurisdictions.
More often than not, they bring their wives, husbands and families along for the ride, to enjoy a spot of rest, recreation and respite from chilly North American and European winters. "There’s a big overlap between international business and tourism," notes Worrell. "A lot of people who come here also live here, boast a significant investment portfolio on the island and often own second homes."
And renewed moves are afoot to boost the number of business and leisure visitors, with the central bank just one of many government departments and agencies seeking to squeeze greater returns out of an industry vital to the island’s future. "The keys to boosting revenues in the tourism sector are increased productivity, improved quality of service and enrichment of the product," says Worrell.
Targeting the message
This also means marketing Barbados more efficiently, targeting its message to the right leisure and corporate traveller. Thus, rather than flooding foreign TV networks or advertising hoardings with entreaties to visit the island, authorities are focusing their attentions on wealthier areas of North America, Britain and, increasingly, East Asia and Latin America.
And tourism isn’t just about beaches and bars. Barbados is a sun-seekers’ paradise for sure, but it’s also an increasingly varied holiday destination. Worrell points to the development of new corners of the industry, notably sports, cultural and heritage tourism. The compact nature of the island and the diversity of activities make Barbados an extraordinarily fulfilling and rewarding place to visit or live. In theory, you can swim or surf in the morning, put in a full day’s work, then play polo or relax with the family before rounding off proceedings with dinner at a world-class restaurant.
It’s this stunning variety and quality of life that makes Barbados doubly amenable to investors, corporate executives and central bank governors alike. Worrell clearly loves his homeland as well as his work. He works long hours but takes time out to reflect, think and ponder before making decisions. Evenings are spent with his wife, often taking long strolls in the clear, warm air. He contributes often to the central bank’s analysis, and to research and papers co-written with leading regional and global financial legislators and thinkers.
Staying ahead of the neighbours
All of these positive economic factors, built up assiduously over the past half-century ensure that Barbados remains one step removed from its regional peers. Despite the rigours of recent years, leading institutions, notably the central bank, kept the island’s spending in check during the financial crisis, trimming its budget where necessary and taking stringent measures to keep its foreign exchange reserves well-stocked.
Barbados’s robust and enduring institutions meanwhile maintain social and economic order. It’s hardly a surprise that the economy rated so highly in the latest Euromoney Country Risk rankings, compiled in December 2013. They show Barbados leading the region in terms of its regulatory and policy environment, and second out of 13 nations on the key issues of corruption, government stability, debt indicators, and political and institutional risk.
Long-term growth plan
Going forward, the central bank chief identifies a two-pronged plan to achieve long-term sustainable growth. The first stems from a clear desire to boost both economic growth and tax revenues by diversifying and adding value to key areas of the economy, primarily tourism and international business services, but also agribusiness and rising sectors like trans-shipment services, information technology, software application development and even film production.
The second is perhaps more painful, but just as necessary and effective: slimming down government, making it more efficient in a drive to provide the best possible support to investors and taxpayers. "There is an ongoing drive toward greater efficiency in the public sector," says Worrell. "We recognize the challenge of increasing productivity in the public sector, and the importance of engaging with the International Monetary Fund [IMF], the Inter-American Development Bank [IDB] and others to build our institutional capabilities."
Barbados’s economic leaders have been true to their word. In February 2014, the government laid off half of the 3,000 temporary public-sector workers targeted to reduce its wage bill. Worrell is quick to enumerate other successful cost-saving measures, such as a plan to consolidate all government revenue generation, from sales and income tax to land and property tax, under a single departmental umbrella, the Barbados Revenue Authority. The central bank and other state bodies are working closely with the IDB and the IMF to achieve this aim.
Efforts are also continuing to boost the stock of Barbadian small- and medium-sized enterprises (SMEs). A sturdy economy and a stable political system have long underpinned stability, but that can come at the expense of the entrepreneurial spirit, as the young and the ambitious plump for reliability over risk.
That’s set to change. Plans are afoot to transform Barbados into a regional innovation powerhouse by 2020. And Worrell points proudly to the emergence of a "series of private and government-led initiatives to generate new entrepreneurs, new ideas, and new investment", a process aided by support from the IDB.
There are in short few reasons not to invest in Barbados. Barbados punches far above its weight, thanks to the drive, determination and intellectual rigour of people like Worrell and respected government bodies like the CBB. He grins once more as he returns to the subject of the island’s future. "When you look at all the reasons for investing for Barbados, it’s clear why we are a good investment destination. We are competitive, we are business-friendly, and we are constantly focused on the need to ensure long-term, sustainable and balanced economic growth."
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