Moody’s impact on Bim
Ratings slip will make investment hard to come by
Two days after the Government’s bond rating was downgraded, a global auditing firm has warned that Barbados could now find it increasingly difficult to secure investors for private-public partnership (PPP) projects.
Partner at PricewaterhouseCoopers Canada, Richard DesLauriers, says Caribbean islands with low credit ratings have a very low chance of attracting
Delivering the keynote address at Day 2 of the CIBC FirstCaribbean Infrastructure Conference at the Hyatt Regency in Trinidad, DesLauriers told business officials that private investors would take into consideration Government’s credit worthiness before they “jump” into PPP projects.
“At the end of the day a PPP project is a long-term commitment between investors and government; that private investors will deliver the infrastructure and the services required and the term that government will pay for it over a long period, which tends to be about 30 to 35 years. For a private investor to do that, they have to have confidence that the government will in fact pay them over that period and they measure that confidence against the credit rating,” he said.
He said even with well structured and planned PPPs, investors would shy away if the country did not have a good credit rating.
“A lot of countries in the Caribbean do not have [good] investment credit ratings. Some of them do, but most of them do not; and that just makes it very difficult to get things done. Credit enhancement is a solution. That is something that should be considered,” advised DesLauriers, as he also noted that “projects in the Caribbean often take a long time to get going from the drawing board to financial quotes”, which was not good for business.
Pointing out that starting a PPP project could be “troublesome and disruptive for people in Government and the public”, he said it was also important that Government
be committed and have experts in the requisite departments, along with proper regulatory framework.
DesLauriers said when starting PPP projects it was also important to get international bidders since they bring knowledge and competition.
The official also suggested that the region be marketed as a single space for PPP projects instead of doing so by individual territories, since some islands were “too small”.