Not a time for spilling any rubbish
What they say is only relevant if we want to embark on an orgy of foreign borrowing . . . 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.
–– Prime Minister Freundel Stuart reacting to last week’s triple notch downgrade of Barbados’ bond rating from Ba3 to B3 by Moody’s.
Equally dismissive was the statement issued at the weekend by the Ministry of Finance in which the Chris Sinckler-led department was just as menacing in its retort of Moody’s, saying the credit rating agency had “clearly overreached in its highly negative conclusions, rushed to judgement, failed to adequately take into consideration the nuances of the Barbados economy”.
Both men were obviously reading from the same prepared script, after Minister of International Business Donville Inniss simply could not resist the urge to communicate the Government’s position on his first sitting with reporters after the Moody’s statement was released.
Still there is no denying the fact that all is not well with the Barbados economy, no matter how much the officials would seek to hide the light of truth under a bushel.
The fact is that our national deficit for 2013/2014 was 11 per cent of GDP, compared to eight per cent from the previous year, or as former Prime Minister Owen Arthur pointed out this past weekend, basically double what the Government had said was its worst-case scenario.
It is also an acknowledged fact that Government’s expenditures have significantly increased, even though the Ministry of Finance has sought to justify the rise by saying the Government had taken a decision to bring to book a number of outstanding payments.
Moody’s also warned of increasing Government debt ratios projected at above 100 per cent of GDP by 2014/2015, coupled with elevated short-term debt issuance and gross financing needs in excess of 30 per cent of GDP.
While not disputing the fact that the current debt is high, the Ministry of Finance however pointed out that external debt services requirements were still below ten per cent of foreign earnings, and that Barbados had not defaulted on any debt.
It also did not contradict Moody’s that reserves, which now stand at around 15 weeks of imports, were likely to decline again or that the Central Bank’s financing of the fiscal deficit was increasing pressure on the Barbados dollar, even though Mr Sinckler’s ministry made a point of saying it “will do what needs to be done to protect the Barbados dollar”.
Interestingly, the IMF has outlined many of the same challenges listed by Moody’s. Yet its assessment did not come in for the same dismissive treatment or rubbish talk we have heard emanating from no lesser mouth than that of our Prime Minister over the weekend.
Indeed, he would have us ignore not only Moody’s, but ratings agencies in general who he says have had a chequered track record with declarations that are not always correct.
But alas, Mr Prime Minister, that Moody’s may have misdiagnosed in the past, does not mean it is wrong now about Barbados.
In fact, we are minded to agree with Moody’s. Not only because your Government has in fact sought to increase the country’s borrowing limit through the Special Loans (Amendment) Act in Parliament, but for the simple fact that we live and work here every day and there is no hiding from the present difficulties.
As proud Barbadians, it is never our expectation that our Government will “meekly and compliantly” submit to what Moody’s has to say, but this is no excuse either for us to allow the Government or anyone else to try to pull the wool over our eyes.
Stevie Wonder could see that Barbados is in deep trouble, even without Moody’s confirmatory statement last week.
So it makes no sense to criminally prosecute Moody’s, or any other ratings agency for that matter, albeit Nobel Laureate economist Amartya Sen and the American Congress would have us so do –– even though these are not people who speak with “papal certainty” about what is going on in the world.
Moody’s surely has not created the devastation that has befallen Barbados, and from which we are still trying to recover.
Therefore, instead of being dismissive and arrogant or seeking to tear down Moody’s or any other entity that says a contradictory word, the Government would do well to gather all the best brains and get to work immediately on a national crisis plan.
Such is not only propitious, but absolutely necessary.