Not adding up

Sinckler tears into latest S&P statement on Barbados

If Minister of Finance Chris Sinckler had to rate the latest Standard & Poor’s (S&P) report on Barbados, the international ratings agency would probably end up with an even more negative grade than the one it recently issued for the island.

In an interview with Barbados TODAY, Sinckler broke his silence on the December 19 lowering by S&P of the island’s long-term sovereign rating to “B” from “BB-”.

And while he did not use the word “poor” to describe the S&P report, he did not hide his displeasure, complaining that “every time they do these downgrades they increase the cost of Government to service its debt and so we don’t take very kindly to those things”.

He has therefore given the thumbs down to the latest S&P rating, saying it was not only “unjustified” but also “illogical”.

While not dismissing the report completely out of hand, Sinckler tore into the document, charging that there were “many contradictions” in it and that S&P’s overall conclusion simply did not match the facts presented within the body of the text.

The Minister of Finance also questioned the timing of the December 19 report, in which S&P also warned that the potential for a further downgrade existed “if the Government doesn’t succeed in bringing down its wide fiscal deficit, if growth boosted by key investment projects fails to materialize, or if external pressures of persistent current account deficits mount”.

To this, Sinckler has responded sharply saying, “it is one thing to sit down and write that from sitting down at a desk somewhere” and “to analyze an economy on paper”, but quite another to “actually deal with it on the ground”.

“You have to know how much a society can actually take in terms of the dosage of bad medicine or tough austerity measures, in terms of holding both the social and psychological fabric of the society together, but also the commercial and economic. We have to take all of those things into consideration. It is not just a statistical measure,” said Sinckler in response to concerns raised about the island’s mounting debt.

“If it was just plain statistics, then we could do it and not care who we impact, who we dislodge or dislocate, which businesses close, who gets unemployed and who is suffering,” he added, insisting that “when you are dealing with real people and people’s lives and business and investments and so forth . . . you have to take the tough with the easy, and ameliorate or stimulate the situation in order not to cause widespread dislocation and discontent to the extent that at the end of the day, you do not achieve the things that you say you want to achieve.”

Sinckler also made it clear that while Government was not afraid to take the tough decisions, it was not prepared to devalue the Barbados dollar or to go into a formal International Monetary Fund programme.

However, he warned that “there may be some additional decisions that we have to take depending on how things turn out. And if it comes to that, we will do so again, but what we are saying is that our goal is to stick to this programme, achieve our targets and understand this is not an overnight experience.

Minister of Finance Chris Sinckler
Minister of Finance Chris Sinckler

“It is not going to happen in six months,  and it is not going to happen in a year. It is going to take us a couple of years  as we are now almost 18 months into the [Fiscal Consolidation] programme and we are looking down the road to see how best we can move to a more comfortable position with our deficit,” he said.

In its statement, S&P said it remained quite concerned about Government’s net debt burden, which is expected to rise to 89 per cent of GDP in 2014 and 92 per cent in 2015, up from 80 per cent in 2013 and 69 per cent in 2012.

However, Sinckler said the increase in debt was expected based on the country’s fiscal deficit.

He also acknowledged differences in S&P growth projections, when compared to those issued by him in his December 16 ministerial statement, but said both were within the margin of error.

In taking issue with the timing of the report, the Minister of Finance argued that there was no need to put the country on “negative watch” at this time.

“My question is why would you do that in December when there are only three and a half months left in the fiscal year? Why not wait until March and take your action?”

As for the report, Sinckler was particularly peeved that after agreeing with the Government that the country’s foreign reserves had stabilized, the fiscal deficit was on a downward trajectory and that there was recovery in tourism, S&P went on to paint a gloomy picture of things to come.

“The winter season is looking relatively good. We have increased airlift coming out of the major markets . . . . They [S&P] have recited all of that. They also said that there are projects that [are] lined up [and while] they can’t  say for certain when they will start, they have agreed and acknowledged that projects have been lined up. And I know some of those investors, both foreign and local, have had teleconferences with S&P.

“Therefore, the statement, in terms of the progress that we are making and the result in terms of the ratings action taken by them, don’t gel, they don’t compute,” argued Sinckler.

He also questioned: “If things that are important to be done are being done and you agree that these things have begun to show results, albeit you maybe think slower than what you might expect, what justifies a two notch downgrade?”

Sinckler also dismissed the suggestion by S&P that “things are fundamentally worse than they were a year ago”, saying, “that cannot be sustained by empirical evidence”.

kaymarjordan@barbadostoday.bb

 

15 Responses to Not adding up

  1. Carl Harper December 30, 2014 at 5:28 am

    Sinckler needs to point out specifically where S&P is wrong and what are the “contradictions,” rather than trying to discredit the agency with political drivel.

    Did Barbados meet its fiscal consolidation targets? Has the deficit increased to 12.5 per cent of GDP when it should be moving in the opposite direction? Has the public sector debt skyrocketed to 75 per cent of GDP? Has foreign invesment fallen from over $400 million in 2012 to under $200 million this year? Has unemployment risen to 13.2 per cent? Has Government been able to secure funding for the Bridgetown Port and Andrews Sugar Factory projects? Why did the World Bank subsidiary company and the Japanese withdraw from both projects, respectively? Can government pay VAT and income tax returns, and pharmacists in a timely manner? Has Barbados been able to grow its tourism over the past 12 months? Can the QEH pay its suppliers to continue credit purchases? Did the foreign reserves reach 14 weeks of import cover without borrowing from Credit Suisse at high interest rate? Is Barbados now forced into borrowing from local banks at short tenures at high interest rates?

    If Sinckler cannot honestly answer those questions to satisfy the Barbadian public, then the S&P’s recent downgrade of the Barbados economy is justified. He must realize that it is his DLP government policies that imposed these hardships on Barbadians and nearly wrecked the economy, and not S&P.

    Sinckler must understand that S&P does not rate future promises or political rhetoric but, rather, performance to date. If you say you will achieve 6.6 per cent deficit to GDP target by March 31 and you extend the fiscal adjustment program by one year, in a Ministerial Statement at Christmas time, S&P will rate you accordingly. Stop trying to “kick the can further down the road.”

    Don’t complain about the “timing” of the downgrade during the Christmas season when you are the one who set the precedence. You brought the Statement at this time so S&P acted when you made your move. As far as one can recall, when the Moody’s downgrade came earlier this year, Sinckler was also critical of the timing, even calling it harsh. Yet he is saying that the economy is better this month than this same period last year.

    Will Sinckler sing the praises of these rating agencies should they ever give Barbados an upgrade or will  he still cuss them?

    The finance minister should not panic. Given all the investment projects and airlift that he promised couple weeks ago, including the sale of offshore oil drilling blocks, if they materialize and the economy turns around with lower deficit and debt ratios and unemployment next year, surely S&P and Moody’s will give a favorable rating. Until then, just grin and bear the fallout from poor fiscal and economic performance thus far, get back to work or resign, and stop playing politics.

    Reply
  2. NAKED DEPARTURE - The Trilogy Series
    NAKED DEPARTURE - The Trilogy Series December 30, 2014 at 6:11 am

    The man used the words illogical and unjustified in a sentence… he should stop talking about himself like that in public!

    Reply
    • Hassan Taylor
      Hassan Taylor December 30, 2014 at 6:27 am

      Lol. I ain’t na politician person and I don’t like what we are going through at this time but I agree with some a the things he is saying. The Imf came here and prescribe this medicine now we taking it they saying it ain’t working. Would you want to see that doctor again? I strongly believe the Imf seeks to destroy these third world and vulnerable societies. And I also believe that they are trying their best to “depeg ” or dollar to the US and they will not ease up until they succeed

      Reply
    • NAKED DEPARTURE - The Trilogy Series
      NAKED DEPARTURE - The Trilogy Series December 30, 2014 at 7:27 am

      But Hassan Taylor, the IMF don’t have to ‘try’, they can just do it! They don’t have to pretend…, they are the big honchos, and not many people of the world know of Bim. So, it would be so easy for them to turn their backs.

      Reply
    • Kourtney James
      Kourtney James December 30, 2014 at 10:13 am

      NAKED DEPARTURE – The Trilogy Series should worry about yourself and how you trying so hard to get your book sold. Maybe what you got you deserved

      Reply
    • Candice Elenor
      Candice Elenor December 30, 2014 at 11:22 am

      Luv Ya Naked Departure …. lolllll

      Reply
    • Drian Xyers
      Drian Xyers December 30, 2014 at 12:01 pm

      The IMF is apart of white supremacy and domination and we as a nation should have never gotten in bed with them from the start. All bajans have to do is live within our means and change our revenue system to suit us and not that eurocentrix model.

      Reply
  3. Veronica December 30, 2014 at 7:56 am

    I’m wondering if Sinkler thinks when they gave us a good grade if they were wrong then too…. He take we’s idjuts? We have a 99.7% literacy rate!!!!!

    Reply
  4. christine December 30, 2014 at 8:18 am

    Good morning! Season greetings to all! My prayers are with the barbadians. God will see you through after a storm is a calm. With every situation there is always success. I totally agree with carl Harper it is time these politicians look out for their people. They should be paid according to their performance. Then they will truly work for the nation. God is watching things will be better

    Reply
  5. seagul December 30, 2014 at 8:32 am

    The IMF has something towards us called an obsessive disorder, an ideological obsessive disorder. Under their measures it renders us to continue to organize a society around protecting the privileges of people that are already rich. I’m sure the biggest political hack on this forum knows this.. Every Barbadian who has something to offer our country has a duty to step forward and share his experience, if they don’t spare us the speech of people resigning…

    Reply
  6. seagul December 30, 2014 at 9:42 am

    Excuse me, but God can’t protect us from these voracious vultures called IMF’s. Their programs are designed to destroy all the mechanism structures for our people’s development and upliftment and keep them enmeshed in poverty and underdevelopment. Why is it that the black politician does not cooperate and allow any other kind of organization within his race to thrive ? United we stand………united we stand.

    Reply
  7. smallh December 30, 2014 at 12:09 pm

    Carl Harper – I am in total agreement with every word you wrote.

    Reply
  8. Rickie Nurse December 31, 2014 at 1:21 am

    Is the Minister of Finance for real? Let me use some of his quotes from this exert.
    1) “You have to know how much a society can actually take in terms of the dosage of bad medicine or tough austerity measures, in terms of holding both the social and psychological fabric of the society together, but also the commercial and economic. We have to take all of those things into consideration.

    My response to you Mr. Minister is, you certainly did not apply or follow what you are now preaching to S&P, you and your government did not consider us.
    2) “If it was just plain statistics, then we could do it and not care who we impact, who we dislodge or dislocate, which businesses close, who gets unemployed and who is suffering,” he added, insisting that “when you are dealing with real people and people’s lives and business and investments and so forth . . . you have to take the tough with the easy, and ameliorate or stimulate the situation in order not to cause widespread dislocation and discontent to the extent that at the end of the day, you do not achieve the things that you say you want to achieve.”

    My response to you Mr. Minister is, there was no duty of care shown by you when your axing of worker were being executed, entire households are to this day without the sole bread winner and in many instances multiple bread winners were also axed by you at the same time. In this case you are lying to us about yourself.

    3) However, he warned that “there may be some additional decisions that we have to take depending on how things turn out. And if it comes to that, we will do so again, but what we are saying is that our goal is to stick to this programme, achieve our targets and understand this is not an overnight experience.

    My response to you Mr. Minister on this is, it is clear to me that you are in a guessing game with the management of our economy and no matter what the out come, you will stick to your program, you are the one that said it. That in it self show a lack of tact and arrogance when you could not even suggest that you and you government would be willing to change course and try a different approach to the constantly failing one that you are currently using.

    4) For you now to have an issue with S&Ps announcement of another downgrade at this time befuddles my mind when you conveniently delayed the

    Reply
  9. Rickie Nurse December 31, 2014 at 1:41 am

    Is the Minister of Finance for real? Let me use some of his quotes from this exert.
    1) “You have to know how much a society can actually take in terms of the dosage of bad medicine or tough austerity measures, in terms of holding both the social and psychological fabric of the society together, but also the commercial and economic. We have to take all of those things into consideration.

    My response to you Mr. Minister is, you certainly did not apply or follow what you are now preaching to S&P, you and your government did not consider us.
    2) “If it was just plain statistics, then we could do it and not care who we impact, who we dislodge or dislocate, which businesses close, who gets unemployed and who is suffering,” he added, insisting that “when you are dealing with real people and people’s lives and business and investments and so forth . . . you have to take the tough with the easy, and ameliorate or stimulate the situation in order not to cause widespread dislocation and discontent to the extent that at the end of the day, you do not achieve the things that you say you want to achieve.”

    My response to you Mr. Minister is, there was no duty of care shown by you when your axing of worker were being executed, entire households are to this day without the sole bread winner and in many instances multiple bread winners were also axed by you at the same time. In this case you are lying to us about yourself.

    3) However, he warned that “there may be some additional decisions that we have to take depending on how things turn out. And if it comes to that, we will do so again, but what we are saying is that our goal is to stick to this programme, achieve our targets and understand this is not an overnight experience.

    My response to you Mr. Minister on this is, it is clear to me that you are in a guessing game with the management of our economy and no matter what the out come, you will stick to your program, you are the one that said it. That in it self show a lack of tact and arrogance when you could not even suggest that you and you government would be willing to change course and try a different approach to the constantly failing one that you are currently using.

    4) For you now to have an issue with S&Ps announcement of another downgrade at this time befuddles my mind when you conveniently delayed the Budgetary proposal and nullified and rebuttal from the Opposition.

    Quote: “My question is why would you do that in December when there are only three and a half months left in the fiscal year? Why not wait until March and take your action?” You also said that there was no need to put the country on further negative watch.

    My response to you Mr. Minister is, you would have love S&P to hide the truth about the state of the economy and our affairs from the people, as you are accustom doing with alot of irrelevant rhetoric and parliamentary banter, in other words, lie and hide the truth, then hit them with it later, but give them false hope for now.

    Mr. Minister, do this country a BIG favour, have some decency please and resign, you clearly aren’t capable of doing the job.

    Reply
  10. Tony Waterman January 1, 2015 at 5:40 am

    When was the Last time that you heard a DRUNK Man admit that he was DRUNK ????
    Sinckler is sober everyon else is DRUNK

    Reply

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