Zero rating

Worrell rubbishes dollar threat

Curb your debt, or be faced with devaluation.

This is the latest caution issued by international ratings agencies to the Freundel Stuart Government during meetings this week in New York with a high-level team led by Central Bank Governor Dr DeLisle Worrell.

However, addressing a town hall meeting in Brooklyn last night, Dr Worrell rubbished the financial advice, in much the same way he, the Prime Minister and the Minister of Finance Chris Sinckler have done over the past two years, even in the face of negative downgrades by both Moody’s Investor Services and Standard and Poor’s that have had the effect of reducing the country’s credit rating to the level of junk.

After slapping the island with a triple notch downgrade in 2014, Moody’s had suggested that the Barbados dollar, which trades at US$0.50, was facing increasing pressure due, in part, to Government’s borrowing, which, it said, was affecting the country’s currency peg to the US dollar.

In response, Sinckler had said devaluation was not even being considered, and he was firm that Government would not allow any ratings agency to dictate its policies.

“The Government is committed to the fixed exchange regime and will do what needs to be done to protect the Barbados dollar. Neither the Government nor people of Barbados want a devaluation of the Barbados dollar, and as the Government, we are determined to do what is required to maintain the fixed exchange rate and honour our financial commitments.”

He was strongly backed by the Prime Minister, who, in a subsequent address to the local business community was totally dismissive of suggestions that the Barbados dollar was under threat, while stating that he was well aware that “this will serve neither as a deterrent nor a discouragement to that small coterie of alarmists who continue to believe in economic witchcraft and are therefore preoccupied with, and intrigued by, this brand of necromancy”.

However, arguing that the country has defended its exchange rate for 40 years, “in good times and in bad”, Stuart said then that “those who blithely and glibly argue that our currency is over-valued have not been able to show us how devaluation has improved spectacularly the situation of those neighbours who pursued that course”.

Central Bank Governor Dr Delisle Worrell
Central Bank Governor Dr Delisle Worrell

Speaking during last night’s town hall meeting in Brooklyn, which was coordinated by the Barbados Consulate and with Ambassador Tony Marshall in attendance, the Central Bank Governor struck a similar tone as he assured his audience, made up largely of members of the Barbadian diaspora, that devaluation was still not on the cards.

However, the governor acknowledged that Government’s borrowing remained an issue.

“They [ratings agencies] worry about our tied exchange rate. They say as long as you are borrowing all this money, your peg rate is under threat [but] our peg is not under threat,” said Worrell, who revealed that he had met with three ratings agencies, including one that did not actually rate Barbados.

“I know what our reserves are every day [and] we do the things whenever it comes under threat,” he assured the gathering.

However, the country’s chief monetary adviser said the position taken by the rating agencies was that “we heard you, we understand you, but we will not stop worrying until you get the debt ratio down.

“[Therefore], if you want to impress the rating agencies, you have to get the debt ratio down below the growth rate of GDP,” he acknowledged.

He stressed that Barbados’ credit was good “for anybody looking for yield and solid investment” and the country has never defaulted on its debt.

Worrell also argued that given the nature of the country’s debt, such restructuring was unattractive.

“You would have to rob Peter to pay Paul. Also, debt restructuring raises issues with your credibility,” he said, explaining that the current fiscal deficit really has to do with weak revenues and administration and public service and sector issues.

“So once you have restructured the debt, you still have to fix all the things that will reduce the deficit permanently.  There are certain policies for consolidation within the public sector which the Government has announced, but as yet, not completed – fundamentals you have to do.”

Earlier this week, the Minister of Finance laid the Estimates of Expenditure and Revenue for Financial Year 2016-2017 in Parliament, making provision for debt repayment in the order of $1.7 billion, up from $1.6 billion in the current fiscal year, which ends on March 31.

And while the island’s debt to GDP ratio currently hovers above 100 per cent, Worrell told the gathering that the economy had shown solid growth.

However, other than to say that he and his team had given it their best shot, he did not speak to whether or not Barbados faced further downgrades. 

10 Responses to Zero rating

  1. Rawle Maycock
    Rawle Maycock March 12, 2016 at 3:12 am

    I guess that two days ago I posted this as it came up on Facebook what I posted last year. I know that it will soon be a reality, all of you that don’t agree with me when I post, I guess that you would say to your friends, family who ever I don’t like he but who he sah is true!

  2. Sunshine Sunny Shine March 12, 2016 at 3:31 am

    Again, the arrogancy of this government to tout their trumpets in reneging advice for this country to address the matter of its dept and high fiscal deficits can no longer be deemed mindboggling, but the behaviour of foolish jesters. That this government would choose to defy what the rating agencies understand the economy of Barbados to be heading is a foolish act steeped in the foolish hearts of foolish people who continue to show the foolishness of their ways in governance that does not inspire but depresses. No amount of rubbishing the sterling advice from the rating agencies is going to change Barbados junk status or improve it spiralling out of control debt. The rating agencies remain the single one influence that can determine rather Barbados continues to borrow at a reduced or affordable interest rate or if it will suffer the possible fate of seeing its dollar devalue because a few high-minded men choose to defy rather than heed.

  3. Tony Webster March 12, 2016 at 5:52 am

    Our Insistent Menacing Friends did NOT say, “you MUST devalue your dollar”; they (apparently) did not even remind us that the BB$ is significantly over-valued; that it does not compare with our neighbour’s (read competitors) currencies. The DID remind us that we need to CURB OUR FISCAL DEFICITS……which, by an act of God, in a(nother ) fit of pique …continue to rise.

    Pity this “bush-banker”, who, when I first heard and read of “junk-Bond Status”….thought that such represented the bottom-of-de-barrel.

    And the orchestra…played on.

  4. Twistedfalife March 12, 2016 at 6:12 am

    Time for a change or thing will get really. …..really bad if we have to devalue or dollar. …….don’t think that the powers to be know what them doing. …..

  5. Rev. H. Malcolm A. Gibbs-Taitt March 12, 2016 at 11:48 am

    To Sunshine Sunny Shine:
    “Leave the presence of a fool, for there you do not find words of knowledge.
    It is the wisdom of the clever to understand where they go, but the folly of the fools misleads.
    Fools mock at the guilt offering, but the upright enjoys God favour.”
    Proverbs 14:7-9 (NRSV)

    An understanding of the above text: ‘Guilt offering’ (see Lev 5.14-19; 6.1-7) is an offering of reparation or compensation. ‘The upright’ have no need to do so as they already enjoy God’s favour.
    An understanding for the uninitiated: ‘Guilt offering’ (see Lev 5.14-19; 6.1-7) is an offering of reparation or compensation. ‘The upright’ have no need to do so as they already enjoy God’s favour.

    On another issue, I am made to understand that it was questioned why some children, at Springer Memorial Secondary School, have to take premature vacation following the dust problem that plagues this school.
    If the children are adversely affected whilst in the environs of the enclosed schooling, surely, to have these children on the outside would not be helpful. The adverse environmental impact will be too great.

    Rev. H. Malcolm A. Gibbs-Taitt.

    • Sunshine Sunny Shine March 13, 2016 at 8:41 am

      Reverend, English please, I ain’t got the foggiest idea what you are commenting about.

  6. David Hall March 12, 2016 at 6:50 pm

    Am truly saddened by the arrogance of this government which has failed to inspire by both its policies and its rhetoric. If The central Bank has thing so much under control why is there still so much hardship being experienced by many in the land, why does unemployment continue to climb, why does the cost of living keep on rising? How does a government who can’t manage these things expect us to trust it not to hoard away personal wealth and then devalue and jump ship?

  7. dave March 12, 2016 at 10:21 pm

    Enough is Enough with this STUPID IGNORANT Government
    Bajans are putting up with a lot of crap. Whenever the DLP forms the Government, businesses in Bridgetown close down, there is talk of devaluation, unemployment rises; civil servants dont get raise of pay civil servants get lay off ; taxes get increase bus fare gone up’ water rates gone up ; road taxes gone up; gasoline and diesel overpriced ; vat gone up —everything in Barbados in a Mess —and people standing for this nonsense ; industrial relations in a mess; no increase in Salaries

  8. jrsmith March 13, 2016 at 5:09 am

    Barbados/Bajans would be better off , if we were govern by Westminster, until a general election be called…

  9. Carson C Cadogan March 13, 2016 at 8:37 pm

    Tell it to them Governor. Barbados is behind you.

    They must remember this

    “If you can keep your head when all about you
    Are losing theirs and blaming it on you,
    If you can trust yourself when all men doubt you,
    But make allowance for their doubting too;
    If you can wait and not be tired by waiting,
    Or being lied about, don’t deal in lies,
    Or being hated, don’t give way to hating,.:…………

    ………….Yours is the Earth and everything that’s in it,
    And—which is more—you’ll be a Man, my son!”


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