Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

BARBADOS

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of January 31, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: November 3, 1993.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictionsNo.
References to legal instruments and hyperlinksn.a.
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, euro, and 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 international markets. The CBB and commercial banks enter into swap transactions in U.S. dollars, whereas commercial banks switch freely among nonregional currencies.
References to legal instruments and hyperlinksn.a.
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 also be made in U.S. dollars. CBB permission is required for retail outlets to issue change in the same foreign currency in which purchases are made.
Controls on the use of domestic currencyn.a.
Use of foreign exchange among residentsn.a.
Payments arrangements
Bilateral payments arrangementsn.a.
Regional arrangementsBarbados is a member of 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.
Barter agreements and open accountsn.a.
Administration of controlExchange control applies to all countries, except those in the OECS, and is administered by the CBB, which delegates to ADs the authority to approve normal import payments and foreign exchange for cash gifts. Further authority is delegated to commercial banks with respect to current account transactions ranging from BDS$7,500 to BDS$250,000. Commercial banks may allow the transfer of funds to CARICOM countries with respect to all current transactions except those for which special limits or restrictions apply. 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.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
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.
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.
References to legal instruments and hyperlinksn.a.
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 whose annual earnings are at least BDS$50,000 and BDS$100,000, respectively. 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. In cases where authority has not been delegated to ADs, the permission of the CBB is required. Effective February 1, 2006, ADs may maintain foreign currency accounts for returning Barbadian nationals up to the equivalent of BDS$100,000, provided the funds credited to such accounts represent foreign currency earnings from abroad. Companies operating in Barbados and earning a minimum of the foreign currency equivalent of BDS$100,000 a year are allowed to maintain foreign currency accounts up to the equivalent of BDS$50,000 without reference to the CBB.
Approval requiredApproval is given on the basis of the anticipated frequency of receipts and payments in foreign currency.
Held abroadYes.
Approval requiredYes.
Accounts in domestic currency held abroadPermission of the CBB is required.
Accounts in domestic currency convertible into foreign currencyPermission of the CBB is required.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedThe regulations governing resident accounts apply. Effective January 1, 2007, non-Barbadian nationals employed in the offshore sector are classified as nonresidents.
Domestic currency accountsThese accounts may be credited with the proceeds from the sale of foreign currencies, transfers from other external accounts, bank interest, and 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.
Approval requiredNonresident 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.
References to legal instruments and hyperlinksn.a.
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. Commercial banks may allow transfers of funds to CARICOM countries with respect to prepayment of imports from CARICOM countries. Other advance payments require the prior approval of the CBB.
Advance import depositsn.a.
Documentation requirements for release of foreign exchange for importsPayments for authorized imports are permitted on 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.
Domiciliation requirementn.a.
Preshipment inspectionn.a.
Letters of creditn.a.
Import licenses used as exchange licensesn.a.
OtherYes.
Import licenses and other nontariff measuresCertain imports require individual licenses. Some items on the import-licensing list may be freely imported throughout the year, whereas 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, to which Barbados, Dominica, Grenada, Guyana, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago are signatories, 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.
Negative listn.a.
Open general licensesn.a.
Licenses with quotasNot all goods that are subject to licensing are subject to quantitative restrictions or import surcharges.
Other nontariff measuresn.a.
Import taxes and/or tariffsCustoms duties corresponding to the fourth phase of the CARICOM CET are in the range of 5% to 20%. A VAT of 15% is levied. Tariffs ranging from 20% to more than 200% apply to imports of prepared meats, detergents, and T-shirts.
State import monopolyChicken heads, backs, and necks; onions; and sugar may be imported only by the Barbados Agricultural Development and Marketing Corporation, and milk may be imported only by the Pine Hill Dairy.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsProceeds must be repatriated within six months.
Surrender requirements
Surrender to authorized dealersProceeds must be sold to an AD within six months, but exporters may apply for exemptions.
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.
References to legal instruments and hyperlinksn.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 limitsCommercial banks may approve all payments for insurance, freight, advertising, commissions, and fees relating to imports. Commercial banks must report these transfers to the CBB. The limit on unloading, storage costs, and administrative expenses is BDS$250,000 a transaction.
Indicative limits/bona fide testYes.
Investment-related payments
Prior approvalFor payments of profits and dividends to residents of non-CARICOM countries, approval is required for amounts above BDS$250,000.
Quantitative limitsThe limit for principal and interest payments is BDS$50,000 a year for individuals. Commercial banks are permitted to approve all payments abroad of profits and dividends to nonresident beneficiaries in and residents of CARICOM countries.
Indicative limits/bona fide testYes.
Payments for travel
Quantitative limitsEffective February 1, 2006, full authority has been delegated to the ADs to release foreign exchange to residents, without limits, for travel within CARICOM countries. For travel outside CARICOM countries the 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. Commercial banks have the authority to approve all payments for cash currency swaps by in-port ships and cruise liners.
Indicative limits/bona fide testYes.
Personal payments
Prior approvalApproval is required for amounts above the limit. Payments for medical treatment and studies abroad require approval from a commercial bank based on appropriate documentation.
Quantitative limitsThere are no limits on payments for medical treatment or studies abroad. The limit on cash gifts is BDS$5,000 a person a year; the limit for alimony and other maintenance is BDS$50,000 a person a year. Nonresidents may have their pensions remitted to them while residing outside Barbados. Commercial banks may approve all payments with respect to bequests or inheritances that are due to beneficiaries resident in CARICOM countries, under the terms of the wills of persons who were resident or under the rules governing resident intestates for exchange control purposes. Beneficiaries residing outside CARICOM countries are permitted to transfer abroad bequests or inheritances at the rate of BDS$100,000 a year. Commercial banks must, however, continue to report such transfers to the CBB.
Indicative limits/bona fide testYes.
Foreign workers’ wagesCommercial banks may, without prior approval of the CBB, allow transfers of funds for payment of management services provided by residents of CARICOM countries.
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 paymentsCommercial banks are permitted to approve all payments abroad for charges and fees with respect to granting and registration of patents, designs, and trademarks. Commercial banks are permitted to approve all payments abroad for entrance and subscription fees due to nonresident credit and travel card companies.
Prior approvalApproval is required for amounts above the limit.
Quantitative limitsThe limit is BDS$50,000 for subscriptions and membership fees a person a year, and BDS$100,000 for consulting and legal fees for each nonresident beneficiary. No limits apply for subscriptions to magazines, books for personal use, returns and refunds of deposits, and reimbursements of overpaid accounts and insufficient postage payments.
Indicative limits/bona fide testYes.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirements
Surrender to authorized dealersForeign currency proceeds from invisibles must be sold to ADs.
Restrictions on use of fundsn.a.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsCapital account transactions with the ECCB area denominated in Eastern Caribbean dollars are free from controls, except for transactions in debt issues of OECS governments.
Repatriation requirementsEarnings on securities and money market instruments purchased abroad by residents must be repatriated.
Surrender requirements
Surrender to authorized dealersEarnings on securities and money market instruments purchased abroad by residents must be surrendered to ADs.
Controls on capital and money market instruments
On capital market securitiesPurchases and sales of shares and securities of companies cross-listed and cross-traded on any CARICOM stock exchange are permitted without limit. This excludes any government securities cross-listed or cross-traded on those stock exchanges. Commercial banks in Barbados may approve all investments in private unlisted securities in CARICOM countries without the prior approval of the CBB.
Shares or other securities of a participating natureThe Barbados Stock Exchange is authorized to approve all investments in corporate securities in the form of equities cross-listed and cross-traded on CARICOM stock exchanges.
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.
Sale or issue locally by nonresidentsYes.
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.
Sale or issue abroad by residentsExchange control approval is required.
Bonds or other debt securitiesThe regulations governing shares or other securities of a participating nature apply.
On money market instruments
Purchase locally by nonresidentsThe regulations governing shares or other securities of a participating nature apply.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsThe regulations governing shares or other securities of a participating nature apply.
Sale or issue abroad by residentsYes.
On collective investment securities
Purchase locally by nonresidentsThe regulations governing shares or other securities of a participating nature apply.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsThe regulations governing shares or other securities of a participating nature apply.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instrumentsControls apply to all these transactions.
Controls on credit operationsThe approval of the CBB is required for all credit operations. However, ADs may approve applications by domestically owned parent companies for permission to borrow funds from CARICOM and/or non-CARICOM sources for the purpose of investing in the operations of their CARICOM subsidiaries and/or affiliates.
Controls on direct investmentDirect investments require exchange control approval.
Outward direct investmentCommercial banks are authorized to approve investments in private unlisted securities in CARICOM countries.
Inward direct investmentYes.
Controls on liquidation of direct investmentLiquidation of proceeds is permitted, provided 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 past 5 years, at 8%; for the 5 years immediately preceding the past 5 years, at 5%; and for any period preceding the past 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 transactions
LoansCommercial banks in Barbados may approve applications for the transfer of funds for personal loans, maintenance, and financial assistance from Barbados to CARICOM countries without prior approval from the CBB.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsThe annual limit is BDS$5,000 for gifts and BDS$100,000 for endowments, inheritances, and legacies.
Settlements 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.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
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 with respect to both trade and nontrade transactions. ADs are required to sell 25% of their foreign currency borrowings to the CBB. ADs may approve borrowing by domestically owned parent companies from CARICOM and/or non-CARICOM sources to invest in the operation of their CARICOM subsidiaries and/or affiliates.
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 requirementsThe reserve requirement ratio on deposits in foreign exchange is 21%, of which 16% must be maintained in stipulated government securities and 5% in cash.
Liquid asset requirementsEffective April 1, 2006, a 6% foreign currency reserve requirement was put in place, calculated on the foreign currency deposits held at ADs, merchant banks, and trust and finance companies, to be deposited at the CBB. There is no liquidity requirement on deposits in foreign exchange. The liquid asset requirement for domestic currency deposits in commercial banks is 17%, of which 12% must be placed in government securities and 5% in cash.
Credit controlsn.a.
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.
Investment regulationsn.a.
Open foreign exchange position limitsLimits on working balances are set by the CBB. Those on other assets and liabilities are controlled through the Exchange Control Act. If a bank has a short position in forward transactions, it may maintain a long spot position equivalent to 10% of the short position in forward transactions or 5% of the gross spot liabilities, whichever is higher. If a bank does not have a short position in forward transactions, it may maintain a long spot position equivalent to 5% of the gross spot liabilities. Banks must report weekly to the Foreign Exchange and Export Credits Department of the CBB.
Provisions specific to institutional investors
Insurance companies
Limits (max.) on securities issued by nonresidentsn.a.
Limits (max.) on investment portfolio held abroadYes.
Pension funds
Limits (max.) on securities issued by nonresidentsn.a.
Limits (max.) on investment portfolio held abroadApproval 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.
Limits (min.) on investment portfolio held locallyn.a.
Currency-matching regulations on assets/liabilities compositionn.a.
Investment firms and collective investment fundsn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Resident accountsFebruary 1. ADs may maintain foreign currency accounts for returning Barbadian nationals up to the equivalent of BDS$100,000, provided the funds credited to such accounts represent foreign earnings from abroad.
Payments for invisible transactions and current transfersFebruary 1. ADs were delegated full authority to release foreign exchange, without limits, to residents for traveling within CARICOM countries.
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsApril 1. A 6% foreign currency reserve requirement was put in place, calculated on the foreign currency deposits held at ADs, merchant banks, and trust and finance companies, to be deposited at the CBB.
Changes during 2007
Nonresident accountsJanuary 1. Non-Barbadian nationals working in the offshore sector were classified as nonresidents.

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