Learn how foreign currency exchange controls work in Barbados

The Barbados Dollar is pegged to the U.S. Dollar at a fixed exchange rate as determined 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 the context of Barbados, this provides assurance to investors and the general public that the Central Bank can, on demand, exchange Barbados Dollars for a foreign currency at the given exchange rate.

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.

Foreign currency transactions

If you need to exchange Barbados Dollars for a foreign currency, exchange controls apply.

For example, if you use your credit or debit card to buy a product sold by a company in the United States, your bank will need to exchange Barbados Dollars for U.S. Dollars in order to settle the payment.

Likewise, if you go overseas and use your credit or debit card, your bank will need to exchange Barbados Dollars for the given settlement currency in order to complete the transaction.

Both scenarios described above also apply to the exchange of cash. If you visit a bureau de change, exchange controls also apply.

Please note that a Foreign Exchange Fee (FXF) is levied by the Central Bank each time you need to access the foreign exchange market. The fee, at 2% of the Barbados Dollar value of the transaction, is automatically debited by your bank (or the bureau de change, as the case may be).

For exchange control purposes, the Central Bank of Barbados is designated the Exchange Control Authority.

Allowances and exemptions

As it would cause great inconvenience having to submit essential transactions to the Central Bank of Barbados for approval, certain allowances and exemptions are in force to facilitate every day business.

For example, an annual 'travel allowance' of BDS $20,000 applies to individuals. For business travellers, the allowance is BDS $60,000.

The Central Bank of Barbados delegates some of its authority to commercial banks for specific transactions, up to prescribed limits.

The allowances and exemptions are published by the Central Bank of Barbados in Exchange Control Circulars.

Exchange controls only apply to Barbados Dollar accounts. If you hold a Foreign Currency Account in Barbados, transactions from that account are exempt from exchange control because the settlement of such transactions don't require access to the domestic exchange market.

Furthermore, bank accounts denominated in Barbados Dollars which are designated as External Accounts have unlimited access to foreign exchange up to the balance on the account. [1] However, account holders may need to contact their bank if they need to exceed their allowances during a given year, or to make payments that would normally require the approval of the Central Bank.

Submitting a foreign exchange application

If 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 before attempting the transaction.

For one-time payments (not for imports), you can submit your application to the Central Bank of Barbados via the FOREX Online platform.

Applications approved via the FOREX Online platform are transmitted to the corresponding bank electronically for their attention. You should contact your bank with a copy of the approval letter 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 approves the vast majority of applications that are supported by a reasonable position.

[1] External Accounts have unlimited access to foreign exchange pursuant to Exchange Control Circular No. 4