Chapter

BARBADOS

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: November 3, 1993.
Exchange Arrangement
CurrencyThe currency of Barbados is the Barbados dollar.
Other legal tenderGold coins with face values of BDS$50, BDS$100, BDS$150, BDS$200, and BDS$500 are legal tender and are in limited circulation.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe Barbados dollar is pegged to the U.S. dollar, the intervention currency, at BDS$2 per US$1. Buying and selling rates for the Canadian dollar, the euro, and the pound sterling are also officially quoted on the basis of their cross-rate relationships to the U.S. dollar. The quoted rates include commission charges of 0.125% buying and 1.75% selling against the U.S. dollar, and 0.1875% buying and 1.8125% selling against the Canadian dollar, euro, and pound sterling. Certain businesses are allowed to change foreign currency.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketThe Central Bank of Barbados (CBB) periodically obtains forward cover in the international foreign exchange market to cover or hedge its own or the central government’s exchange risks associated with foreign exchange loans that are not denominated in U.S. dollars. Commercial banks are allowed to obtain forward cover in the international markets. The CBB and commercial banks enter into swap transactions in U.S. dollars, while commercial banks freely switch between nonregional currencies.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with residents of countries outside the CARICOM area may be made in any foreign currency or through an external account in Barbados dollars. Settlements with residents of CARICOM countries other than Jamaica, Suriname, and Trinidad and Tobago may be made in the currency of the CARICOM country. Settlements with residents of Jamaica, Suriname, and Trinidad and Tobago may be made in U.S. dollars. Retail outlets are permitted to issue change in the same foreign currency in which purchases were made.
Payment arrangementsYes.
Regional arrangementsBarbados is a member of the CARICOM.
Clearing agreementsUnder clearing arrangements with regional monetary authorities, the CBB currently sells only three CARICOM country currencies: the Bahamian dollar, the Eastern Caribbean dollar, and the Belize dollar. The Trinidad and Tobago, Guyana, and Jamaica dollars float against the U.S. dollar, and the CBB sets indicative selling rates based on rates supplied by the monetary authorities of these countries. These rates are applicable only to government transactions.
Administration of controlExchange control applies to all countries, except those in the OECS, and is administered by the CBB, which delegates to authorized dealers (ADs) the authority to approve normal import payments and foreign exchange for cash gifts. Further authority is delegated to commercial banks in respect of current account transactions ranging from BDS$7,500 to BDS$250,000. Trade controls are administered by the Ministry of Commerce, Consumer Affairs and Business Development (MCCABD). The authority to approve payments to OECS countries is delegated to ADs.
International security restrictionsNo.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents, other than the monetary authorities, ADs, and industrial users, are not permitted to hold or acquire gold in any form other than jewelry or coins for numismatic purposes. Any gold acquired in Barbados must be surrendered to an AD, unless exchange control approval is obtained for its retention.
Controls on external tradeThe importation of gold by residents is permitted for industrial purposes and is subject to customs duties and charges. Licenses to import gold are issued by the MCCABD. Exchange control permission is required to export gold.
Controls on exports and imports of banknotes
On exports
Domestic currencyTravelers may take out up to BDS$500.
Foreign currencyTravelers may take out up to the equivalent of BDS$1,000. Nonresident visitors may export freely any foreign currency they previously brought in.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallySubject to specific conditions under delegated authority, ADs may maintain foreign currency accounts in the names of individuals and companies resident in Barbados. Certain receipts and payments may be credited and debited to foreign currency accounts under conditions established at the time the account is opened. Other credits and debits require individual approval. However, where authority has not been delegated to ADs, the permission of the CBB is required. Approval is given on the basis of the anticipated frequency of receipts and payments in foreign currency.
Held abroadPermission of the CBB is required.
Accounts in domestic currency convertible into foreign currencyn.a.
Nonresident Accounts
Foreign exchange accounts permittedThe same regulations apply as for resident accounts.
Domestic currency accountsThese accounts may be credited with the proceeds from the sale of foreign currencies, with transfers from other external accounts, with bank interest, and with payments by residents for which the CBB has given general or specific permission. The accounts may be debited for payments to residents of Barbados for the cost of foreign exchange required for travel or business purposes and for any other payment covered by delegated authority to ADs. Other debits and any overdrafts require individual approval.
Convertible into foreign currencyBalances on external accounts are convertible. Nonresident holders of foreign currency accounts are not required to obtain central bank approval to remit funds abroad when the funds were not the result of payment for trade or nontrade transactions.
Blocked accountsThe CBB may require certain payments in favor of nonresidents that are ineligible for transfer to be credited to blocked accounts. Balances in blocked accounts may not be withdrawn without approval, other than for the purchase of approved securities.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsADs may release foreign exchange up to the equivalent of BDS$250,000 (c.i.f.) for advance payments for imports into Barbados. Other advance payments require the prior approval of the CBB.
Documentation requirements for release of foreign exchange for importsPayments for authorized imports are permitted upon application and submission of documentary evidence (invoices and customs warrants) to ADs; payments for imports of crude oil and its derivatives are subject to the approval of the CBB.
Import licenses and other nontariff measuresCertain imports require individual licenses. Some items on the import-licensing list may be freely imported throughout the year, while others are subject to temporary restrictions (particularly agricultural products, which tend to be subject to seasonal restrictions). Individual licenses are also required for imports of commodities that are subject to the provisions of the Oils and Fats Agreement between the governments of Barbados, Dominica, Grenada, Guyana, St. Lucia, St. Vincent, and Trinidad and Tobago whether the goods are being imported from CARICOM countries or from elsewhere. Special licensing arrangements have been made for the regulation of trade between Barbados and other CARICOM countries in 22 agricultural commodities.
Licenses with quotasNot all goods that are subject to licensing are subject to quantitative restrictions or import surcharges.
Import taxes and/or tariffsCustoms duties correspond to the CET of CARICOM, which is in the range of 5%–20%. There is a surtax of 75% on some imports that had been previously subject to quantitative restrictions. A VAT of 15% is levied.
State import monopolyn.a.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsYes.
Financing requirementsn.a.
Documentation requirementsn.a.
Export licensesSpecific licenses are required for the exportation of certain goods to any country, including rice, sugarcane, rum, molasses, certain other food products, sewing machines, portland cement, and petroleum products. All other goods may be exported without license.
Without quotasYes.
With quotasExports of sugar to the United Kingdom and the United States are subject to bilateral export quotas, as are exports of rum to the EU.
Export taxesn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Trade-related payments
Prior approvalApproval is required for amounts above the quantitative limits.
Quantitative limitsFor freight and insurance, the limit is BDS$250,000 a transaction, including insurance payments and premiums, as long as the amount is approved for payment by the Supervisor of Insurance. The same limit is applied for unloading and storage costs and administrative expenses; the limit for commissions is BDS$100,000.
Indicative limits/bona fide testYes.
Investment-related paymentsInformation is not available on the payment of amortization loans or depreciation of direct investments.
Prior approvalYes.
Quantitative limitsThe limit for interest payments is BDS$50,000 a year for individuals. For payments of profits and dividends, approval is required for amounts above BDS$250,000, except for listed companies from the CARICOM region on the securities exchange of Barbados, where the limit is BDS$2 million.
Indicative limits/bona fide testYes.
Payments for travel
Quantitative limitsThe limits are BDS$7,500 a person a calendar year for private travel, and BDS$750 a day for business travel, up to BDS$50,000 a person a calendar year.
Indicative limits/bona fide testYes.
Personal payments
Prior approvalApproval is required for amounts above the limit.
Quantitative limitsThe limits are as follows: for medical costs, BDS$100,000 a year; for studies abroad, BDS$50,000 a person a year; for cash gifts, BDS$5,000; and for alimony and other maintenance expenses, BDS$50,000. Nonresidents may have their pensions remitted to them while residing outside Barbados.
Indicative limits/bona fide testYes.
Foreign workers’ wages
Prior approvalYes.
Quantitative limitsNonresidents are allowed to remit amounts to cover commitments while employed in Barbados.
Indicative limits/bona fide testYes.
Credit card use abroad
Prior approvalYes.
Quantitative limitsThe limits are the same as for travel.
Indicative limits/bona fide testYes.
Other payments
Prior approvalApproval is required for amounts above the limit.
Quantitative limitsThe limit for subscriptions and membership fees is BDS$50,000 a person a year, and, for consulting and legal fees, BDS$100,000 for each nonresident beneficiary.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsForeign currency proceeds from invisibles must be sold to ADs.
Restrictions on use of fundsn.a.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsThe issuance and transfer to nonresidents of securities registered in Barbados require exchange control approval, which is freely given provided that an adequate amount of foreign currency is brought in for their purchase.
Purchase abroad by residentsThese purchases require exchange control approval, and certificates of title must be lodged with an authorized depository in Barbados except for regional securities purchased through the Securities Exchange of Barbados. Earnings on these securities must be repatriated and surrendered to an AD.
Sale or issue abroad by residentsExchange control approval is required.
Bonds or other debt securitiesThe same regulations apply as for shares or other securities of a participating nature.
On money market instruments
Purchase locally by nonresidentsThe same regulations apply as for shares and other securities of a participating nature.
Purchase abroad by residentsThe same regulations apply as for shares and other securities of a participating nature.
On collective investment securities
Purchase locally by nonresidentsThe same regulations apply as for shares and other securities of a participating nature.
Purchase abroad by residentsThe same regulations apply as for shares and other securities of a participating nature.
Controls on derivatives and other instrumentsn.a.
Controls on credit operationsThe approval of the CBB is required for all credit operations.
Controls on direct investmentDirect investments require exchange control approval.
Controls on liquidation of direct investmentLiquidation of proceeds is permitted, provided that evidence documenting the validity of the remittance is submitted, all liabilities related to the investment have been discharged, and the original investment was registered with the CBB.
Controls on real estate transactions
Purchase abroad by residentsPurchases require exchange control approval.
Purchase locally by nonresidentsNonresidents may acquire real estate in Barbados for private purposes with funds from foreign currency sources; local currency financing is not ordinarily permitted.
Sale locally by nonresidentsProceeds from the realization of such investments equivalent to the amount of foreign currency brought in may be repatriated freely. Capital sums realized in excess of this amount may be repatriated freely on the basis of a calculated annual rate of return on the original foreign investment as follows: for the last five years, at 8%; for the five years immediately preceding the last five years, at 5%; and for any period preceding the last 10 years, at 4%. Amounts in excess of the sum so derived are restricted to remittances of BDS$30,000 a year.
Controls on personal capital movements
LoansExchange control permission is required for the granting or receiving of loans.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsThe annual limit is BDS$5,000 for gifts and BDS$30,000 for endowments, inheritances, and legacies.
Settlement of debts abroad by immigrantsYes.
Transfer of assets
Transfer abroad by emigrantsThe limit is BDS$100,000.
Transfer of gambling and prize earningsNonresidents may take out winnings.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadAny borrowing abroad by ADs to finance their domestic operations requires the approval of the CBB. ADs may assume short-term liability positions in foreign currencies for the financing of approved transfers in respect of both trade and nontrade transactions.
Maintenance of accounts abroadAccounts must be maintained with overseas correspondent banks.
Lending to nonresidents (financial or commercial credits)Exchange control permission is required.
Purchase of locally issued securities denominated in foreign exchangeInvestment in local securities requires CBB approval.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsThere is no reserve requirement on deposits in foreign exchange. For domestic currency deposits in commercial banks, there is a liquidity requirement of 26% (12% in treasury bills; 8% in government debentures; and, since May 31, 1999, 6% in cash).
Liquid asset requirementsThere is no liquidity requirement on deposits in foreign exchange. For domestic currency deposits in commercial banks, there is a liquidity requirement of 25% (12% in treasury bills, 8% in government debentures, and 5% in cash).
Differential treatment of deposit accounts held by nonresidentsNonresident deposit accounts are treated the same as resident deposit accounts. Differential treatment is based on whether the amount is in domestic currency.
Open foreign exchange position limitsLimits are set by the CBB.
Provisions specific to institutional investorsApproval is required for investment of pension funds abroad. A 6% tax is levied on portfolio investments of pension funds with foreign companies that are not registered with the Barbados Supervisor of Insurance.
Other controls imposed by securities lawsn.a.
Changes During 1999
Capital transactions
Provisions specific to commercial banks and other credit institutionsMay 31. The cash portion of the liquidity requirement for domestic currency deposits in commercial banks was raised to 6% from 5%.

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