The Barbados Dollar is pegged to the U.S. Dollar at a fixed exchange rate set by the Central Bank of Barbados. As a result, the Central Bank must maintain adequate foreign reserves in order to preserve the value of the Barbados Dollar.
The value of the Barbados Dollar is guaranteed by virtue of the foreign reserves held by the Central Bank of Barbados. 'Foreign reserves' refer to assets, such as cash and gold, held by the central bank of a given country.
In order to prevent uncontrolled outflow of capital and to protect the value of the Barbados Dollar, the Government of Barbados enforces exchange controls on the purchase of foreign currency.
When you use your credit or debit card outside Barbados, or purchase foreign currency at an authorised dealer, it triggers an outflow of foreign currency. This outflow of capital is subject to exchange controls.
Please note Barbados Dollar accounts are liable to the 2% Foreign Exchange Fee on foreign currency purchases. This also applies to credit and debit card transactions that require foreign currency to settle the payment. The fee is calculated on the Barbados Dollar value of the transaction.
Travelling overseas with a Barbados Dollar account? Check your foreign currency limit with your bank. For most individuals, it's $20,000 BBD per year, in equivalent foreign currency. If your limit runs out while overseas, you WILL NOT be able to use your debit or credit card outside Barbados.
Always keep an eye on your foreign currency limit, and use the FOREX Online platform to request a replenishment at least 7 days before you anticipate running out. You can be stranded for several days without the ability to pay for anything if your limit runs out while overseas.
Companies, firms and societies with a Foreign Currency Permit are exempt from exchange control. [1]
Exchange controls only apply to Barbados Dollar denominated bank accounts held in Barbados. They do not apply to Foreign Currency Accounts.
The Central Bank of Barbados delegates some of its authority to commercial banks for specific transactions, up to prescribed limits.
In order to facilitate day-to-day business, various allowances and exemptions are published in Exchange Control Circulars. For example, there is an annual travel allowance of BBD $20,000 for individuals. For business travel, the annual allowance is BBD $60,000 determined at a rate of BBD $1,000 for each day of required overseas travel. For example, if a business traveller needs to go overseas for 30 days, their commercial bank will be permitted to release foreign exchange of BBD $30,000 without reference to the Central Bank.
Most commercial banks in Barbados that issue Visa / Mastercard credit or debit cards which support foreign currency purchases automatically make available the personal travel allowance to allow customers to make foreign currency purchases at home and abroad.
The Central Bank is cognisant of the fact that a resident may require foreign currency for any number of reasons. These allowances and exemptions do not necessarily represent the limit as to the amounts of foreign currency that a person can obtain, or the permitted reasons for which foreign currency is required.
The purpose of the exchange control regime is not to prevent legitimate access to foreign currency. Rather, it is designed to protect the value of the Barbados Dollar given that it is pegged to the US dollar at a fixed exchange rate. The Central Bank must maintain an adequate supply of Barbados Dollar banknotes and coins in circulation, while also maintaining a fixed exchange rate between the Barbados Dollar and the US dollar. If a large number of customers tried to obtain substantial quantities of foreign currency within a short window, the Central Bank could be forced to reduce the value of the Barbados Dollar against the US dollar to reduce the risk of depletion. In an absolute worst case scenario, excessive outflows could collapse the economy and wipe out everyone's income and savings. Exchange controls are a safety mechanism to ensure that outflows are sustainable, although the Government of Barbados has publicly acknowledged the growing consensus that the island should move away from the imposition of exchange controls in the long-term.
In the event that you exceed your annual allowances or if the proposed transaction is not covered by one of the exemptions provided by the Central Bank, you will need to submit a foreign exchange application for approval via the FOREX Online platform. Depending on the nature of the application, it will be sent either to your commercial bank or the Central Bank for approval.
If your application is approved, you should contact your commercial bank by e-mail with a copy of the approval notice and verify that the limit on your account has been amended before attempting the transaction.
There is no guarantee that an application for foreign exchange will be accepted. However, the purpose of the exchange control regime is to prevent uncontrolled outflow of capital by requiring persons to submit appropriate evidence in support of the foreign exchange they need. The Central Bank of Barbados approves the majority of applications that are supported by a reasonable position.
[1] Companies, firms and societies in receipt of a valid Foreign Currency Permit are exempt from exchange control pursuant to Section 9 of the Foreign Currency Permits Act, 2018.