He told members of the private sector here that the conditions in Barbados today did not justify any tampering with the exchange rate.
“The government over which I preside will, through its policy choices, continue to make the preservation of that exchange rate a matter of continuing priority. I give this assurance, well aware that this will serve neither as a deterrent nor a discouragement to that small coterie of alarmists who continue to believe in economic witchcraft and are therefore preoccupied with and intrigued by this brand of necromancy.”
Stuart told members of the Barbados Chamber of Commerce and Industry that the island took the decision in 1975 to have a fixed exchange rate in relation to the US dollar after delinking from the British pound sterling.
He said for the past 40 years, government had defended the exchange rate.
“We have done so because, in good times and in bad, this exchange rate has served us well. Those who blithely and glibly argue that our currency is over-valued have not been able to show us how devaluation has improved spectacularly the situation of those of our neighbours who have pursued that course.
“I have certainly heard no argument credible enough to persuade me that it is a course of action to which we should have resorted,” he said, arguing that devaluation was supposed to be a policy response to a “chronic disequilibrium in a country’s balance of payments position”.
Prime Minister Stuart pointed out that its rationale is to correct that chronic imbalance by making imports more expensive and exports cheaper.
“Resort to it, however, is not without risk or peril as the venerable economist, Sir Arthur Lewis so discerningly observed,” he said, telling the audience government is of the view that the State should create an operating environment in which the private sector could flourish with uninhibited vigour.