Rating drop not a ‘horrendus reduction’


Publisher of Global News Matters, Melissa Marchand, does not see the lowering of Barbados’s rating from BBplus to BBminus by Standard & Poor’s rating agency as a “horrendous reduction”.

Marchand noted that while lowering the ratings of Barbados, the rating agency was quick to add, “but stable”, to its assessment of the country’s investment environment.

“The move reflects concern about the island’s ongoing current account deficit issues and high fiscal deficit due to a drop in revenues in the midst of a weak global economy,” Marchand noted.

Standard & Poor’s projects that the Government’s debt burden will increase to more than 70 per cent of GDP during the current fiscal year, from 67 per cent in 2012 and 60 per cent in 2011, which does pose challenges for the government which has to anticipate reduced national savings , and perhaps, interest rate rises.

Marchand went on to say the financial crisis of 2008 “caused an eruption in the debt levels of non-industrialised nations like Barbados, which when added to the S&P’s ratings reduction, can erode its credit worthiness, its image and the amount of money it will have to spend to get money.”

Marchand notes “the downgrade comes at a time when the country is looking forward to huge investment inflows in projects like the Cruise Pier, Pier-head Marina, Four Seasons and the Cane Industry Restructuring Project”. She thinks that the capping of maximum tax on international investment at 2.5 per cent and the other exemptions for international business are pluses.

Marchand thinks that savvy investors, undeterred by the ratings downgrade will find lots of sound opportunities in the services sector which will drive growth in Barbados.

The publisher thinks that public-private- partnerships can help sustain an economic recovery in Barbados.

Marchand contended the role for PPPs was definitely worth watching “ particularly in the growth areas of international business, financial services and renewable energy where demonstrable growth can kick start an economic recovery. (NC) 

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