Another downgrade for Barbados

Moody’s Investors Service on has downgraded Barbados’ government bond rating to Ba3 from Ba1, putting the country’s rating deeper into junk territory.

It cited the country’s “continued anemic economic performance”; ongoing deterioration in the government’s financial strength, due to persistently large fiscal deficits and rising debt levels; the deterioration in the government’s debt profile as a result of the significant increase in domestic short-term borrowings over the past two years; and the fall in foreign exchange reserves by more than 30 percent during January-September to $505 million for its two-notch downgrade.

Moody’s also said the country’s credit outlook remained negative.

“The continued negative outlook on Barbados’s rating primarily incorporates Moody’s expectation that the government’s debt metrics are likely to continue to deteriorate. Additional factors driving the negative outlook are the rating agency’s expectation that (1) Barbados’s growth prospects will likely remain subdued; (2) the recently announced fiscal consolidation plan is unlikely to reverse current trends in government debt indicators; (3) the government is likely to face increasing financing costs; and (4) pressure on the exchange rate peg will continue to increase,” it said in a statement issued a short while ago.

The ratings agency added that Barbados’s rating would face further downward pressure in the event that the government is unable to achieve its fiscal consolidation targets, or if growth continues to underperform the government’s expectations, and debt ratios continue to rise as a result.

“Moody’s could downgrade the rating further if international reserves continue to decline and/or the government continues to rely heavily on short-term debt and Central Bank financing,” it said.

“While an upgrade is unlikely given the negative outlook, Moody’s could stabilize the outlook if the fiscal consolidation plan leads to a stabilization of government debt ratios, the economy returns to growth, the government decreases its reliance on short-term debt and central bank financing, and international reserves rebound.”

Moody’s also adjusted Barbados’s local-currency bond and deposit ceilings to Baa3, its long-term foreign-currency bond ceiling to Ba1, its short-term foreign-currency bond ceiling to Not-Prime, and its foreign-currency deposit ceiling to B1.

This is the third downgrade for Barbados in exactly a month, following on the heels of Standard & Poor’s on November 20 and CariCRIS earlier this week.



7 Responses to Another downgrade for Barbados

  1. David E Hall
    David E Hall December 20, 2013 at 8:15 pm

    This is so sad. The NO confidence motion against The Minister of Finance was very justified. Where is all the stupid Big Talk the DLP had before the election-How can thy honestly fight to remain in office when they have ruined our country.

  2. David E Hall
    David E Hall December 20, 2013 at 8:27 pm

    All who doubted the government was lying during the election and all along, Know now.

  3. Nicole Robinson
    Nicole Robinson December 20, 2013 at 8:33 pm

    The country was ruined the day after David Thompson died. He must be looking down and wondering why he put a man that is clearly outta his dept in his place and then made some of his party members ministers. Can only pray now

  4. David Hall December 20, 2013 at 8:45 pm

    MY Goodness, Dear Lord help us. In all seriousness- The DLP cabinet ministers who voted for Mr Sinckler during the last NO Confidence motion certainly cannot in all good conscience be still convinced that he is doing a good, or even a reasonable job with the economy. If they do then it means that they have become resigned to the fate that after all these years, that this sordid performance is all Barbados can muster. If that is the case its time for them to throw in the towel.

  5. David E Hall
    David E Hall December 20, 2013 at 8:50 pm

    If this trend continues, very soon people will not want to take our currency and it will essentially devalue itself.

  6. Consuelo N Richards
    Consuelo N Richards December 20, 2013 at 9:16 pm

    Urgent change of government needed

  7. Oneal Ward
    Oneal Ward December 21, 2013 at 12:17 am

    I wish people would stop using every bad thing to exemplify the wrath and capricious nature of a god. This has nothing to do with a supernatural deity but rather the ignorance of the people who both run the country and the ones who elected the pussies who are running the country. Stop trying to evade personal responsibility for the mistakes of the inept.


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