Voters in Barbados rang in the changes in a general election on Tuesday, voting
out former Prime Minister Owen Arthur's Barbados Labour Party, and replacing
it with a Democratic Labour Party (DLP) government led by David Thompson, who
has pledged reforms to make Barbados a more attractive place for private investment
and asset management.
Thompson's DLP won 20 seats in the 30-seat House of Assembly, in the process
extinguishing the BLP's hope of winning an unprecedented fourth successive 5-year
term in office. Thompson was expected to be sworn in as Prime Minister on Thursday,
after a recount in one tightly-contested seat.
While the phrase "fiscal prudence" is a recurring theme in the section
of the DLP's manifesto focused on economic policy, the Party has proposed some
important changes to monetary policy that will further relax exchange controls
and encourage more investment, particularly from non-residents.
According to the manifesto:
"Capital controls on the ability of local financial institutions to acquire
foreign investments will be relaxed from 25% to 50% over a five-year period.
This will allow these institutions to diversify their total portfolio investments
as well as improve their capacity to offer wealth management services to non-residents."
"Exchange controls will be removed on non-residents. This will remove
one impediment to the high net worth individuals accessing financial services
in Barbados."
"Residents and non-residents will be able to hold bank accounts in US
Dollars, Euros, Canadian dollars and Sterling in unrestricted amounts provided
these are not funded from Barbados dollar sources. The holding of different
currencies will eventually help to diversify the financial services industry."
"A 5% rate of income tax will be applied to interest earned on these balances
in order to encourage their repatriation from foreign banks where they remain
undeclared. These deposits will be subject to the existing foreign currency
reserve requirements."
"Persons who are in Barbados on work permits will be deemed non-resident
and free of all exchange controls, and if working for a company registered under
any of the international business legislation, may be paid externally in a foreign
currency and only their remittances to Barbados declared for income tax purposes."
"Exchange controls will be removed on property transactions between nonresidents
including those who are on work permits who should be designated as nonresident
for exchange control purposes."
"Restrictions will be removed on amounts up to BDS$10,000 for amounts
remitted for the purposes of supporting children, parents or siblings who are
resident abroad. This will be monitored by the Commercial banks and the Central
Bank to ensure the system is not abused."
However, the new government sounded less enthusiastic with regard to regional
integration, and while the DLP says that it remains "fully committed"
to the regional integration movement, it has stressed that in future, such commitment "must reflect
the essential national interests of Barbados".
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