Another downgrade for Barbados

Concerned that Government continues to finance Barbados’ high debt and deficit through the printing of money, the Caribbean Information and Credit Rating Services Limited (CariCRIS) today lowered by one notch its ratings on the debt issue of US$300 million of the government of Barbados to CariBBB and CariBBB+ on its foreign and local currency rating, from CariBBB+ and CariA- respectively.

In a release issued today the regional rating agency said the action was taken based on  available public information, as the Freundel Stuart administration had failed to meet its requests for its regular onsite annual surveillance meetings.

A negative outlook has also been assigned to the ratings.

“The downward adjustment of Barbados’ ratings and the negative outlook assigned are driven by concerns over the continued high fiscal deficit and increasing debt burden, which is being financed by the printing of money, creating a challenge for maintaining the fixed exchange rate, and by the delay in several tourism related foreign direct investments (FDI) projects which may temper economic growth,” the regional ratings agency said.

Freundel Stuart

It also pointed out that even though fiscal consolidation has been a top priority for the Government of Barbados, “not enough progress has been made thus far”.

“While the primary balance has been in surplus for the last two fiscal years and continues to be so in this fiscal year, the large debt and interest burdens have become intractable, pushing deficits and exacerbating the problem,” it explained.

“Additionally, the fixed exchange rate is under threat of revaluation due to the printing of money to finance the fiscal deficit while the continued delay in tourism-related FDIs such as the luxury Hyatt hotel may create a challenge for accelerating much needed growth,” it added.

Minister of Finance Chris Sinckler has been under pressure to deliver better financial results.

Today’s announcement by CariCRIS comes as a further blow to Government, which has been accused of serious economic mismanagement by the Opposition in the wake 17 previous downgrades the country has suffered– mostly by the international credit ratings agencies Moody’s and Standard & Poor’s —  since the ruling Democratic Labour Party (DLP) came to power in 2008.

It also comes against the backdrop of concerns that the country may need to re-enter into a formal programme with the International Monetary Fund, after having to do so back in 1991 under a previous DLP Government led by Erskine Sandiford (now Sir LLoyd). Nonetheless, the Stuart administration has so far been strongly resisting the urge to do so, even though rumour has been rife that such a move is on the cards.

However, CariCRIS acknowledged today that for the nine months to September 2016, Barbados’ economy continued on its growth path that had started in 2014, with a relatively solid year-over-year increase of 1.3 per cent.

Real gross domestic product (GDP) growth of 1.4 per cent is forecast for full-year 2016.

CariCRIS said it expects real GDP growth in the order of 1.7 per cent in 2017, based on continued strong performance in tourism, supported by an anticipated 11 per cent increase in airline capacity from the United States and Canada.

 

24 Responses to Another downgrade for Barbados

  1. Ryan Bayne
    Ryan Bayne January 10, 2017 at 11:50 pm

    Well, what I tell ya.

    Reply
  2. Santini More
    Santini More January 10, 2017 at 11:52 pm

    Another day, another downgrade! PM Freundel Stewart, can you please take a moment from denigrating the citizens of Barbados in front of repeat visitors, and ring the bell for the start of the election campaign.

    Reply
  3. Glenn Damon Clarke
    Glenn Damon Clarke January 10, 2017 at 11:59 pm

    Exactly how low can one be downgraded? There is something past rock bottom ?

    Reply
    • Indrani Baxter January 11, 2017 at 1:30 am

      At this point, yep, past rock bottom. Now we’ve reached the center of the earth. China will soon be using us to mine for coal. SMDH

      Reply
  4. Wayne T Griffith
    Wayne T Griffith January 11, 2017 at 12:13 am

    Another pothole

    Reply
  5. Arthur Collymore
    Arthur Collymore January 11, 2017 at 12:21 am

    I’m disappointed in that i predicted this downgrade for late 2016 as i knew that it was coming. The hallmark of Stuart’s leadership is that it has nothing to do with Barbados or her citizens but it is solely about Stuart the man. Apparently, nothing worries him & he just can’t be bothered as the ship of state descends into abysmal depths from whence only God can ascend.

    Reply
  6. Ryan Bayne
    Ryan Bayne January 11, 2017 at 12:23 am
    Reply
  7. Roman West
    Roman West January 11, 2017 at 12:43 am

    Congrats

    Reply
  8. Dwayne Jack
    Dwayne Jack January 11, 2017 at 12:44 am

    This was already covered wit the pothole speech so y’all behaving as if y’all never hear bout the country getting a downgrade before…. from time to time you will hear bout these inconveniences, which are really transitory inconveniences …….

    Reply
  9. Tony Webster January 11, 2017 at 5:59 am

    Clocks are fascinating things. Most have a pendulum, whicin’…is like it’s heart. A pendulum requires an impetus, to get it going. Same thing wid an economy. The continued ticking of the clock, and its accuracy, and general usefullness, requires the knowledge to effect proper maintenance: adjustment to the balance-wheel; regular winding of the spring (or counterweights); and cleaning and oiling. Evaht’ing it seems …requires knowlege, care, love, attention.

    Clock-making is part science, and part art. Clocks are also known and admired for their beauty, consistency, and are a re-assuring sight.. an intrinsic fellow-traveller in one home…a part of our daily lives. I know, as I have made one, and it rests now, in perfect working condition, in Edmonton, Alberta, a departing gift to my nephew and his Guyanese-born wife, who together with my God-Daughter Paris…just upped and relocated their posteriors – and my clock- for seemingly no good reason at all … where they now watch my clock, in their brand-new home…ticking gently away. Pendulums deserve special respect, as no matter how much impetus one imparts to a pendulum…if will inescapably, come to the limit of its movement…and then swing back. A sort of irrefutable , self-adjusting , re-calibration, of any force that seeks to avoid or disrespect the laws of nature, of gravity…or of economics.

    Tick…tock… I will not tell you why they left these shores: ask the clock.

    Reply
  10. Savannah West January 11, 2017 at 7:08 am

    Im sure that PM believes this downgrade is just ‘another inconvenience in life’

    Reply
  11. Lennox hewitt January 11, 2017 at 7:44 am

    How things so good and still getting all these down grading ? Bare down grading had nuff last year now start this year wid one .

    Reply
  12. Peter January 11, 2017 at 9:51 am

    Tony Webster, I think I understand what you are trying to imply, using the movement within a clock as an analogy. However, within a clock, correct time is measured by that movement and that movement has to be constant to ensure accuracy. too much or too little speed renders inaccuracy. I on the other hand would use flight as my analogy. A plane uses enough energy or force to give it lift. It climbs to 10,000 ft. and stabilizes. Unless it is given more thrust it cannot climb to its highest flying altitude. If compared to people and governments, it will not peak or reach its highest point. Instead, it will fly at low altitude albeit until it runs out of fuel and crash. Tony, you are very smart, well read and intelligent and sometimes you expound on things too deeply and ordinary people of which I am included, do not quite get the jest of your written and highly educated work of “literature.”

    Reply
  13. Peter January 11, 2017 at 9:59 am

    Read carefully again all, especially Zeus, Alex Alleyne and Carson Cadogan. This is the recipe for a devaluation. If it looks like a rat, smells like a rat and behaves like a rat, then It MUST be a rat. Thf formal announcement will be made few days before the election date is announced through mere vindictiveness, and whomever takes over the reign of leadership will have to deal with that. whether it is Mia, Donville, Dale, or even Richard. They will have that shame to clean up.

    Reply
    • Richard Johnston January 11, 2017 at 11:00 am

      Devaluation doesn’t help settling debt denominated in US dollars like this one. How much of Barbados’ debt is in USD?

      Reply
      • Peter January 11, 2017 at 11:46 am

        Richaerd, you are sot on the mark. All trade and business matters are done in US dollars. AQLL of Barbados’ debt is in US currency. Lots of countries conduct Barter trade agreements but in US dollar values Precious metals and stones, and Oil. Some trade minerals for food and medical supplies at vastly reduced prices, You are spot on there Richard. Iran for example traded rocket and long range missile technology with India and Pakistan for Oil. Israel and the USA knows this.

        Reply
    • harry turnover January 12, 2017 at 2:42 pm

      No they will NOT wait until days before the next election.They will do what they did the last time with regards to the lay offs.They will say that the BLP has plans to devalue the dollar if elected and that they( DEMS ) have no such plans.
      I do ,however, agree with you that whoever wins the next election will have a battle with it.

      Reply
  14. Ann Thomas January 11, 2017 at 10:33 am

    I wonder if the words of our esteemed leader will be reprised for this new downgrade: “what they say has as much value as what you would see in any garbage dump collected by the Sanitation Service Authority.” Remember those words when trying to convince us that downgrades did not matter? We know different.

    All I know is that he needs to ring the bell and put the country out if its misery. They have more than amply demonstrated they do not know what to do to continue on the Pathways to Progress.

    Do the right thing for once and set us free.

    Reply
  15. Alex Alleyne January 11, 2017 at 11:18 am

    Cut the politicians pay and freeze it for a number of years, Send home all those people employed by government that is of retirement age and just coming to work , doing nothing and collecting a big fat cheque. Hire some young , bright people at a cut-rate salary for about 5 years. Find more jobs for people , cut taxes and give people more spending power.

    Reply
  16. Alex Alleyne January 11, 2017 at 11:33 am

    Stop locking up people willy-nilly and shut down most of the Jail House, DODDS. Make it that everyone must have a passport and ID card , for a fee of course. Over 18 years of age and under 65 pay a 1 or2 dollar fee to visit the polyclinic and hospital for medical care plus medication.
    A road to recovery, small but it’s a start.
    BIM now a face at the bottom of the well , soon we will be down and under. So sorry for the next group in power, it going to take them about 20 years in order to turn things around. With all the Political wits and power , can’t see them doing nothing no time sooner.

    Reply
  17. Peter January 11, 2017 at 11:48 am

    Richard, you are perfectly sot on. All business and trade transactions are calculated in US dollars.

    Reply
  18. Peter January 11, 2017 at 11:49 am

    That is spot on.

    Reply
  19. Tony Webster January 11, 2017 at 1:46 pm

    @Peter: you are too kind, Sir! Might I also tip my hat to @Richard, as past sins will remain and confront us, regardless.,

    It is a monumental pity that not all Bajans graced with the responsibility of adult suffrage, have a basic grasp of how all things come together, to keep our BB$ rate-peg stable. It seems we are far too preoccupied daily grind at home and at work, to realize that S.S. Barbados only can surmount the waves assaulting our currency, ONLY if we have FIRST earned. ( or borrowed) F/X, AND have some in reserve for meeting the calls made on these reserves by you, me, the commercial banks, and not to overlook, government itself. We need to ensure a continual flow on inward remittances from the Bajan diaspora, plus F.D.I.. Even a modest reduction in either, would put another furrow in the Guv’s worried brow. It’s a huge task to keep all components of the formula in balance, and it would be quite wrong to assign such responsibilities solely to the CBB: it has a much greater political component, and others should be man-enough to haul their fair share of the load. Especially so, where the nuances need, urgently, to be communicated to the average Bajan Joe and Jean.

    Reply

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