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 regardless of the currency in which the account is denominated.
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.
Companies, firms and societies with a Foreign Currency Permit are exempt from exchange control. [1]
Exchange controls apply to all bank accounts held in Barbados regardless of the currency, but some accounts are de facto exempt. For example, Foreign Currency Accounts and External Accounts held by non-residents have unlimited access to foreign exchange. [2] [3]
As it would cause inconvenience having to submit every day transactions to the Central Bank of Barbados for approval, various allowances and exemptions are in place which 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 (maximum BBD $1,000 daily). [4]
The Central Bank of Barbados delegates some of its authority to commercial banks for specific transactions, up to prescribed limits.
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 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] 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.
[2] See Exchange Control Circular No. 3 for the definition of 'non-residents' for exchange control purposes.
[3] Foreign Currency Accounts and External Accounts held by non-residents have unlimited access to foreign exchange, up to the balance on the account, pursuant to Exchange Control Circular No. 4.
[4] See Exchange Control Circular No. 13 for more information about travel allowances.