If action is not taken swiftly,Chris Godwin Youth Jersey, the Barbados dollar risks devaluation owing to a rapid decline in foreign exchange reserves while the Government is spending more than its revenue, a leading economist has said.In its second quarter report, the Central Bank of Barbados (CBB) stated that the international reserves held by the monetary authorities fell by Bds$229 million (Bds$1 = 50 cents US) during the first half of 2013, and the fiscal deficit jumped from 6.2 percent last year to 9.4 percent,Dorian Johnson Youth Jersey, which represents the amount the administration spends over what it receives.Charlie Skeete,Facundo Roncaglia Jersey, a retired Senior Economist at the Inter-American Development Bank said,Ethan Pocic Womens Jersey, “Barbados cannot go on this way without running the risk of not being able to protect the value of its currency”.The CBB report, released last week, pointed to dismal performances in all of the island’s productive sectors, and comments of the respected economist were yesterday quoted in newspapers and on radio stations.“All the indicators suggest that something has to be done by the monetary and fiscal authorities in Barbados to correct this situation,” he said, and added, “If your goal is to protect your foreign exchange reserve, then you need to act now.If you do not act now,Juan Cuadrado Chelsea Jersey, you will continue to lose foreign exchange reserves.”Barbados has maintained an exchange rate with its dollar being pegged at half that of the United States currency for some 40 years, and did so essentially by maintaining and progressively building its foreign reserves to cover importation of goods and services into the country.At the end of June the estimated reserves stood at $1.2 billion, which is equivalent to 16.4 weeks of imports.Driven by an IMF benchmark, the generally accepted standard for sustained confidence in the Barbados dollar is a stockpile of reserves that is equal to 12 weeks of imports. Should it fall below,Gareon Conley Jersey, the administration may be pressured to devalue the currency or seek an IMF bailout, or both.These options tread on an emotional trigger for Barbadians who regard the island’s economy as above and beyond any IMF intervention.Also lending voice to the island’s financial crisis yesterday was Carol Nicholls, Managing Partner of the international financial advisory organisation, KPMG.She spoke of concern that investors may lose confidence in the economy if moves are not quickly made towards recovery.“Clear messages need to be sent so there is no flight of capital et cetera and there is confidence in the economy, [and] the banking sector,” she said.