Dollar threat

S&P downgrades the economy again, predicts further gloom

Despite assurances by Prime Minister Freundel Stuart and Minister of Finance Chris Sinckler that there will be no devaluation of the Barbados currency under their watch, the international credit ratings agency Standard & Poor’s (S&P) is warning Barbadians that the dollar is still in danger.

S&P today warned that unless the Stuart administration did a better job at controlling its debt and restoring foreign reserves, the dollar was at risk of devaluation.

Prime Minister Freundel Stuart and Minister of Finance Chris Sinckler.

It was the same dire warning that the now fired Governor of the Central Bank of Barbados Dr DeLisle Worrell first gave in January and repeated last month, a week after both Sinckler and Stuart had insisted the dollar was safe as long as they were in office.

And speaking at a news conference on Monday, the Minister of Finance again assured Barbadians that there would be no devaluation as the country was not facing a “doomsday” scenario.

However, S&P today painted a much gloomier picture of both the fate of the dollar and the Barbados economy on a whole, as it announced yet another downgrade, this time to ‘CCC+/C’, based on Government’s limited financing alternatives and low international reserves. And if the conditions do not improve, there will be a further downgrade within the next year, S&P warned in issuing a negative outlook for the island.

“As a result, we are lowering our long-term foreign and local currency sovereign credit ratings on Barbados to ‘CCC+’ from ‘B-’.

“We are also lowering our short-term foreign and local currency sovereign credit ratings to ‘C’ from ‘B’,” the ratings agency said.

It also explained that its negative outlook reflected its view that Government was either unable or unwilling to take timely steps to redress the situation.

The ratings agency telegraphed that it had little confidence in the Stuart administration’s ability to drag things back from the edge, as it completely ignored the assurances from both Stuart and Sinckler that devaluation of the Barbados dollar was not an option.

It was not immediately clear whether its report was completed before the announcement that a revamped economic advisory team to be led by former Prime Minister Owen Arthur was being formed, or if it felt the team would make little difference.

“The downgrade reflects our view that the government of Barbados’ willingness to take timely, proactive corrective measures to strengthen its financial profile continues to erode . . . . We consider the policy of ongoing dependence on central bank financing at odds with the government’s goal of defending Barbados’ long-standing currency peg with the U.S. dollar.” S&P said in presenting its rationale for the downgrade.

It concluded that Government’s limited access to private sector funding locally, as well as a fall in external funding and dwindling foreign exchange reserves, weakened the country’s ability to meet its debt-servicing requirements.

The international agency was harsh on the administration over the pace at which it moves to correct the problem, suggesting strongly that it had little confidence that the Democratic Labour Party (DLP) Government would follow through on any meaningful measures announced in the Estimates of Revenue and Expenditure to be presented next week by Sinckler, particularly with an election about a year away.

“The government plans to present the 2017-2018 budget [Estimates] in the coming month. While it seemingly aims to rely on increased recourse to asset sales to fund the deficit, in our view, the prospects for deeper expenditure or revenue adjustment are uncertain, underscored by the poor track record of execution. This comes as the country moves into an electoral cycle, with parliamentary elections due by February 2018,” it said.

The American financial services company said Government was behind schedule with the streamlining of state enterprise financing, the management of which continues to be a drag on the public purse, it said.

In addition, the agency pointed to the proposed sale of the Barbados National Terminal Company Limited, which is still pending a year after Sinckler said it was a done deal.   

“This demonstrates policy inaction and prospects for slow progress on asset sales,” S&P stated.

“In sum, the various failures to respond in a timely fashion to mitigate fiscal and financial pressures further weigh on our view of Barbados’ institutional and policy effectiveness.”

With both the Wyndham Hotel at Sam Lord’s Castle and the Hyatt project on Lower Bay Street suffering delays, “and our expectations for ongoing risks associated with sluggish fiscal correction” S&P lowered its growth forecast for Barbados, as well as the gross domestic product in relation to the population, “which weakens Barbados’ overall economic profile”.

“The negative outlook reflects the potential for a downgrade over the next twelve months should the government fail to make additional progress in lowering its high fiscal deficit or if external pressures worsen with persistent and large CADs [current account deficits].

“This scenario would likely lead to further deterioration in the availability of deficit financing and pose challenges for the fixed exchange rate,” it said in its outlook for the economy.

S&P said it could revise the outlook to stable within the next year if the administration is able to stem further slippage in its fiscal accounts, “be it from implementation of fiscal measures or a stronger-than-expected rebound in growth; improves its access to financing, especially from private creditors locally and globally; and stabilizes the country’s external vulnerabilities and bolsters international reserves”.

Today’s downgrade is the second since the start of the year – the Caribbean Information and Credit Rating Services Limited in January lowered by one notch its ratings on the debt issue, and well as its foreign and local currency rating, with a negative outlook – and it comes as a further blow to Government, which has been accused of serious economic mismanagement by the Opposition in the wake of 18 previous downgrades – mostly by S&P and Moody’s – since the ruling 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, although Sinckler has ruled it out, even though Arthur has been pushing for such a programme.

29 Responses to Dollar threat

  1. Sunshine Sunny Shine March 4, 2017 at 12:16 am

    No harsh deplorable comments from the Prime Minister and Minister Sinckler concerning the rating agencies latest downgrade? This is not like them to remain reticent without the usual mouthings. We are accustom to hearing these two so called brainiacs discrediting the rating agencies downgrade and painting unflattering pictures about them as not understanding the economic affairs of Barbados. Mr. Prime Minister is this what you meant when you stated quite some time ago that when you are finish restructuring the economy that your DLP administration under your lest than desirable leadership will be herald at the best DLP administration in the history of Barbados governance? You sure you did not mean it the other way around?

    Reply
    • Randolph March 4, 2017 at 11:10 am

      When the history books are written,he will be remembered as the worst PM Barbados has ever had.What a shame.

      Reply
  2. Tracy Brown
    Tracy Brown March 4, 2017 at 12:25 am

    check out dem faccccceee……….

    Reply
  3. Sunil Brome
    Sunil Brome March 4, 2017 at 12:34 am

    Listen…I don’t know how anyone in their right mind could defend their leadership. It is abundantly clear that we are sinking…to defend this behavior thru loyalty for a party is just as irresponsible as the ministers. This has nothing to do with Barrow and other DLP greats, this is our future.

    Reply
  4. Arthur Collymore
    Arthur Collymore March 4, 2017 at 12:37 am

    I hate to repeat myself. On the morning of the 23rd day of October 2010, I said that this idiot will destroy both party ( DLP) and country. Fast forward to March 2017. Support for the dlp has been decimated while the country lies in ruins. We are all doomed, especially by a PM whose ego would not permit him to be advised.

    Reply
  5. Taurus Bull
    Taurus Bull March 4, 2017 at 1:03 am

    Arrogant Asses does sink a ship and still feel they are above water. Water filling their lungs and they still saying they are good,this is where we are at right now.

    Reply
  6. Boyce Jr Angus
    Boyce Jr Angus March 4, 2017 at 1:20 am

    Wow…18 downgrades under these idiots belt….this is the first ever PM that inspired no sort of respect from me…….none…..smh……Damn Liar’s Ppl

    Reply
  7. Arethia Goodman
    Arethia Goodman March 4, 2017 at 1:28 am

    Yes but you all still working and getting money , buying

    Reply
  8. Rosemary Leon March 4, 2017 at 6:17 am

    All I can say is “Lord have mercy”. Mr. Stuart PLEASE call the election.

    Reply
  9. Harry March 4, 2017 at 6:44 am

    Only a fool or a rabid party supporter could believe anything the MOF says, how many times have we heard him state that something would shortly happen i.e. the Paradise project etc. and months & years afterwards nothing happens. He like the rest of his cabinet are a bunch of incompetent jokers. He has presided over 18 downgrades what a record………..

    Reply
  10. jus me March 4, 2017 at 8:23 am

    Fruendel now finding de trute in the words
    NO FREE LUNCHES

    Reply
    • Randolph March 4, 2017 at 11:17 am

      They are planning to state the FACTS at their conference.I hope they will state the fact that they sent home about 4000,took away free university education etc.

      Reply
  11. Walmark John F March 4, 2017 at 8:25 am

    Wonder what B’dos will be like when these politicians move to make B’dos a Republic…. all I can think is Banana…..

    Reply
  12. jus me March 4, 2017 at 8:57 am

    Imagine.
    Your boss die and leave you the WHOLE business.
    Imagine.
    You suddenly can put your hands into BILLIONS.

    Imagine.
    There is ABSOLUTELY not responsibility for you.

    Imagine .
    Whatever you do is above reproach.No blame is ever yours.

    Imagine.
    You can ignore this business TOTALLY and it continues to provide you with more than you ever need.

    Imagine.
    That you can pick and choose where to travel, how to travel,only the best.

    Imagine.
    You may eat your fill daily , as many times as you wish, drink what you wish., and never pay ONE cent.

    Imagine.
    You residence is maintained, run at your will, staffed cleaned and costs you NOTHING.

    Where do we STOP??
    We don’t.
    I am PM of BARBADOS.

    But lets have a balance.
    LOOK WHAT I , AS PM am giving you in return!!

    Reply
  13. jus me March 4, 2017 at 9:34 am

    DEAR CHRIS, few words of WISDOM.

    Mr AFFERS way is known as KICKING THE CAN DOWN THE STREET.

    /////////

    If A owes B and borrows from C, to pay B, DOES A , then NOT OWE , or simply owe a different body?

    If C agrees to loan to A, but uses money that is not money of C but of B, who gains? What alters beneficially for A?or B?

    If A agrees with B, to pay back less over a longer period, is the problem mitigated or exacerbated.
    Does A owe less or more?. Does A owe MORE and for LONGER period ?

    If the money A has borrowed from B is actually the Pensions of 100s of 1000,s of people, and has been squandered ,stolen or simply disappeared maybe devalued by 200%, what calculation can the persons, owed by B, for money loaned by B to A, reasonably make to secure their future ,let alone their money.?
    In finality ,will the can , then at the end of a very long street actually contain anything beneficial, that B can repay to those who entrusted B with their future??

    Reply
  14. Joan Worrell March 4, 2017 at 9:51 am

    We are in deep doo doo. No one man can rescue us from this predicament. Dr. Estwick’s plan should be rubbished by every right thinking Barbadian. Mascoll talked about a Mauritius economic model leading up to the last election. That sounded fine because the country was seeing economic growth before the U.S and Europe following the recession of 2008. However he did not take into consideration that Mauritius is one of the most corrupt countries in the world. It accounts for over 50% of black money. It is strategically located at the crossroads of Asia and Africa and has become a substantial duty-free distribution hub for the south-east African region. Like Estwick’s plan, Mascoll’s should also be rubbished. Owen Arthur has offered to help with a team of economists who worked with him over the 15 years that he was in Government. Let us forget how many people have to eat humble pie. It is in the best interest of Barbados, if we support Owen in his fight to help turn around the economy. I would suggest that he names his team within the next three weeks. If the BLP can do better, let them name their team. I almost forgot Grenville’s Solution Barbados. Let us see your team. Barbadian people would decide which is the best to carry out the rescue operation. I say once more, no one man can do the job. @ Hal Austin, let us know which team you support when you see the list of names. lol

    Reply
  15. Joan Worrell March 4, 2017 at 11:17 am

    This is not the first time that we are facing an economic crisis and it wouldn’t be the last. The formation of CTUSAB helped us under the Sandiford Administration. I am asking Owen to expand on CTUSAB and bring on board your team of economic experts in any advisory committee that you head. Forget the naysayers. Publish the names for the whole of Barbados to see who would be helping us to get back on our feet. If the Opposition can match or better your team, let them publish their list of names. The UPP has already given its blessings to the committee . Regretfully Solutions Barbados is keeping their cards close to their chest. The Barbadian public will decide who to trust to lead them out of this dilemma .

    Reply
  16. J. Payne March 4, 2017 at 12:30 pm

    UK = BrExit
    USA = DemExit
    BDOS = BarDown.

    Reply
  17. Lori March 4, 2017 at 12:36 pm

    I don’t know why these idiots don’t resign and allow others to try get us out this mess

    Reply
  18. Timothy Thomas March 4, 2017 at 3:04 pm

    @joan Worrell where are you getting your information from. When did Clyde speak of Mauritius, please get your facts straight. Is Owen bringing a team of economist? where and when? Owen first have to be officially offered before jumping the gun.

    Reply
  19. Maria Bentham March 4, 2017 at 3:35 pm

    Two blind mice make the right decision and let’s get an election we are going under although it’s going to take a miracle to bring us out of the hole that this government has got us in and to think I was one of the people to did this injustice to our island

    Reply
  20. Hal Austin March 4, 2017 at 4:27 pm

    Joan,

    I support Team Barbados. I know we can do much better. I am not big on mediocrity.
    Our first priority is moral leadership from the very top. That is what is missing. Everything flows from that.

    Reply
  21. Hal Austin March 4, 2017 at 4:29 pm

    Joan,

    I am backing Team Barbados. I know we have the quality I do not believe in mediocrity.

    Reply
  22. clint March 4, 2017 at 5:14 pm

    Everyone is commenting and rightfully so; however the DLP will be reelected February 2018! You all Bajans are ignorant to what is going on and spiritually ignorant for a so-called Christian society. Enough said!!!

    Reply
  23. S Williams March 5, 2017 at 4:28 am

    They MUST be in denial but HELLO ! Poor job – get out now DLP before you carry us further down the ( ) creek with no paddle

    Reply
  24. Shirley brown March 5, 2017 at 6:31 am

    I think barbados needs to get rid of this prime minister he isnt doin anything for this country look at the condition of the QeH. There isnt any development takin place in the country . But jus last november he spent millions entertainin a prince y? No taod bein fixed no schools bein built all over the caribbean hear governments undertakin project but nothin happenin if it wasnt for the private sector barbados would be dead. Time to take this old man out of office put a young person with vision to turn barbados around like how david thompson had barbados

    Reply
  25. Rob Roy March 5, 2017 at 3:18 pm

    All hail the President of The Republic of Barbados.

    Reply
  26. jus me March 5, 2017 at 5:01 pm

    Are we agreed??

    Reply
  27. jus me March 5, 2017 at 5:54 pm

    Joan Worrell,
    Lets be realistic.
    With the numbers involved and the fact of 60% of our income to Government $ already accounted for.
    Their figure, so of course it has to be far worse.

    Taking into account the inherent behaviorable unaccountability of ANY, who offer themselves as our Saviours, where will the cash come from?
    How will what is necessary be generated ,be generated without, the Normal, siphoning off of the money as usual?
    The massive spending on Worldwide Freebie jaunts for hosts of Politcos, costing millions, apart from those who then rule being not here to rule. The usually Gravy Train antics.
    Look at the logic.
    Under our system any Dead beat , deadloss, can be virtually unemployed one week and at the Helm of Barbados the next.
    Sinclair was WHAT, certainly I am sure NOTHING that qualified him to be CEO of the entire Barbados monetary system.

    I am not being unfair I am being truthful and realistic.

    FS was a small time lawyer of a very very small Island
    Now is head of BARBADOS inc. freeloading and travelling around the World 1st class all the way at our expense.

    I would be interested to know how many millions that we look for now ,he has blown, pompasetting and galavantin, doing what>>Achieving what>>?
    Except showing the entire World the extent of the Passiveness and tolerance of Bajuns.
    By walking on their faces to compliment his own ego.

    We can no longer allow the JUST OFF THE STREETS lawyers and politicos to have COMPLETE free reign ,it is destroying us.

    We cannot any longer allow election of these would be Dictators..
    When we have seen from the Total ineptitude ,Barbados has been suffering from, for ever since..
    Figure juggling for so long , that NO ONE, can unscramble this disaster of a financial omelette.
    Sinclair , distorts , hides, declares, whatever suits the moment of time , and the current declarations of the scale of the disaster.

    HOW??
    Do we produce the impossible amount required?
    In the very short time we have at our disposal, when they have had 8 plus years to bring us to our knees.

    OWEN is acting the role of the One eyed man in the Land of the Blind.
    BS baffles brains.
    His option is no more than ,MAYBE , a stay of execution, he is practising, the age old political GET OUT.
    By kicking the can down the street.

    Barbados, is DIEING of a disease, a corrupt politico, lawyeral disease, and we calling in more of the same VIRUSES that are the disease, to CURE US???
    We Insane. If we do not look elsewhere.

    Not going to happen is it.? Barbados has stumbled from one Corrupt crisis to the next, now is PAY BACK time.
    FREE LUNCHES FINISHED.

    Hello HAITI.

    Reply

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