PM: Moody’s downgrade is trash
Prime Minister Freundel Stuart has described Moody’s recent downgrade of Barbados as nothing more than trash.
Reacting to Moody’s lowering of Barbados’ credit rating from Ba3 to B3, Stuart said yesterday, “What they say is only relevant if we want to embark on an orgy of foreign borrowing in which people should know how much we should have to borrow, how much our money should cost.
“But if we are not intending in the short or medium term to go to the capital markets to borrow money, what they say has as much value as what you would see in any garbage dump collected by the Sanitation Services Authority.”
The Prime Minister was speaking to the media during a tour of the Barbados Manufacturing Association’s Expo (BMEX) being held at the Lloyd Erskine Sandiford Centre.
His statements come as Government seeks to increase the country’s borrowing limit through a ‘Special Loans (Amendment) Bill that has been placed before the House.
The bill was not discussed at the last Tuesday’s sitting, leading to speculation that it was postponed as a result of the downgrade earlier in the day.
Stuart said the opinions expressed by Moody’s “ are designed to send signals to the capital markets as to whether or not Barbados’ bonds should be treated in a particular way.
“They are free to express their opinions about Barbados because we are paying them to do that. But it doesn’t mean when they express opinions that we meekly and compliantly submit to what they say because we know the reality here in Barbados,” he stated.
The Prime Minister delved into the track record of rating agencies to support his contention that their declarations are not at all times correct.
“They expressed opinions in the past that gave the impression – not Moody’s but the rating agencies on the whole – that all was well in the world, and they were wrong. And in fact the Western economy collapsed when they were saying that all was well.
“And there are still people around who believe that the rating agencies should be criminally prosecuted for misleading the world and creating the devastation that has befallen the Western world, and from which we are still trying to recover.
“I know that the Nobel Laureate economist, Amartya Sen, actually insists that they should be criminally prosecuted. I know that the American Congress has also said the same thing. So we’re not dealing with people here who speak with papal certainty about what is going on in the world. They express opinions like the rest of us.
“They have their work to do and we respect that work very highly. But it is not as though they say when the second coming is going to take place. Those things are both beyond their kin and beyond their capacity,” he added.