Downgrade no surprise, says private sector

Today’s downgrade of the Barbados economy by international credit ratings agency Standard & Poor’s (S&P) came as no surprise to the private sector, according to the non-profit organization charged with advancing the interests of the business community.

Still, business leaders said they were disappointed it had come to this, especially since the remedies prescribed by S&P were the very ones that the private sector had repeatedly recommended.

“This downgrade was not surprising as the metrics used to measure the economy – the deficit and debt as a percentage of gross domestic product – were all worse than before. What is concerning is that the outlook is negative and the remedial action required by the rating agency has been opined by the private sector for a very long time,” President of the Barbados Chamber of Commerce and Industry (BCCI) Eddy Abed told Barbados TODAY soon after S&P announced this afternoon that it had downgraded Barbados’ long-term foreign and local currency sovereign credit ratings from ‘B-’ to ‘CCC+’ and the short-term foreign and local currency sovereign credit ratings to ‘C’ from ‘B’.

S&P also issued a negative outlook for the island, while warning that the sustainability of the Barbados dollar was now under threat, amid Government’s continued reliance on the Central Bank to finance its deficit.

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.

“Increased reliance on Central Bank financing of the still-high government deficit and the fall in international reserves reflect heightened challenges for policy implementation, the sustainability of the peg to the US dollar, and underpin expected weaker growth prospects in Barbados,” S&P said in its overview.

Earlier today, Abed joined other private sector partners, the labour movement and Government in a meeting of the tripartite Social Partnership at which they discussed both the deficit and the low level of foreign exchange.

The business executive said the BCCI was optimistic that there would be a turnaround of the economy if all the partners worked closely to immediately implement the required corrective measures.

However, he said “it will require sacrifices from all citizens for the greater good”.

Meanwhile chairman of the Barbados Private Sector Association Charles Herbert described the latest downgrade as disappointing.

Referring to today’s meeting of the Social Partnership – the first for the year, Herbert said there was consensus among the partners that urgent action was needed to shore up falling foreign reserves and curb the persistently high fiscal deficit.

The social partners agreed to form two sub-committees – one to address the decline in foreign exchange reserves and the other the address the fiscal deficit.

“Coming out of the meeting we are disappointed to hear of the further downgrade to Barbados, but we think that even if we knew then, the action that we took at today’s meeting would be the same, and in fact this is timely action to create the confidence that would change the [rating] at the next review,” an optimistic Herbert said.

It was on Monday that Minister of Finance Chris Sinckler held a news conference at which he gave the assurance that the country was not facing a “doomsday” scenario, and the dollar was not under threat.   

Sinckler could not be reached for comment today, however, the Ministry of Finance released a statement through the Barbados Government Information Service stating the downgrade was expected.

Today’s downgrade was the 18th since the DLP assumed office in 2008, a trend economist and Opposition Barbados Labour Party (BLP) candidate Ryan Straughn said was “bordering on ridiculous” and proof of the failure of the Freundel Stuart administration’s economic policy.

“The current administration has continued to disregard the warnings that the fiscal policies that they have been pursuing are not benefiting Barbados. This particular downgrade coming at this time . . . really underscores the importance that we need to get this thing corrected and corrected in a serious way,” Straughn told Barbados TODAY.

Straughn said Sinckler ought to have known of the pending downgrade when he held the news conference on Monday, and he should have advised the Barbadian public that it was coming.

In any event, he said, even if Sinckler had not known on Monday, he certainly ought to have had the information before today’s meeting of the Social Partnership.

“The issue for me here is how do you expect people to have any confidence in you if you keep withholding information from people?

“It is disgusting that people would have left that meeting today not hearing from the Government itself that we were indeed downgraded this afternoon but had to come hear it from a press release or the media. That is something that is fundamental. If we are going to have a tripartite system it has to work in the interest of the people,” Straughn insisted.

marlonmadden@barbadostoday.bb

7 Responses to Downgrade no surprise, says private sector

  1. sticks and stones March 4, 2017 at 7:34 am

    some in the Private sector who are now crying crocodile tears are a big part of Barbados debt problems for some of them have feast off the fatted calf having a healthy taste for greed and a large appetite for loans at taxpayers expense leaving govt to hold the bag

    Reply
  2. jus me March 4, 2017 at 8:01 am

    If you all cant see by now Barbados has been led off the edge of a cliff by this latest lot of Misfits called DLP Government.
    Then when you hit the bottom you will.
    We are in Freefall, and shortly will have a VERY HARD Landing.

    DO NOT save your cash,put it into something that will maintain value. Buy US$.
    Spend it, while it will buy something.
    Buy long dated canned foods
    Soon all you will have , is REALLY what it is, Coloured paper.

    Politicians are covered, they RULE.
    YOU DONT, you are RULED

    Reply
  3. Fred Volkman March 4, 2017 at 9:28 am

    Living in a building with ridiculous high daily rental rates which is seeing about a 40% occupancy rate and walking beaches which from experience one can only describe as super quiet in spite of it being high season, perhaps a devaluation would work in favour of Barbados.
    Brexit has influenced decisions by Brits and Barbados is not the best value when it comes to other countries including the US and Canada when compared to other destinations.
    So a $$BDS that is worth less in terms of the pound or dollar becomes more attractive but only if you can get folks here.
    If this building is a bench mark, the BHTI members don’t get it.
    There are huge vacancy rates yet 2018 prices are being quote 5% higher. That is really clever. Quoting in US or Pounds will only make it worse and feeds the greed of the elite.

    Reply
  4. Waiting March 4, 2017 at 10:15 am

    Barbados we need a 4 year election cycle rather than 5 for in the event the Government is doing well they will keep going but in the event it is awful we wouldn’t have to suffer so long. It will also force the incumbent to keep working rather than just relax until the election year as this set have done.

    Reply
  5. pri March 4, 2017 at 10:49 am

    I have to admit that I agree with the comment from Mr. Straughn in this article that both the MoF and PM must have had some knowledge of the downgrade and did not feel it necessary to at least suggest it may happen at the press conference and meeting of the social partnership before the news broke public. It suggests the lack of trust in the people of Barbados by both gentlemen. Again I ask was Mr. Arthur made aware?

    Reply
  6. Mikey March 4, 2017 at 8:01 pm

    Sticks and Stones, what loans the private sector get that taxpayers have to pay back ???
    You ever got a loan that somebody else paid back ???
    Tell me where to go to get one !!!
    STOP TALKING FOOLISHNESS. YOU ARE LOOKING FOR A SCAPEGOAT

    Reply
  7. John q March 5, 2017 at 10:08 am

    Gov’t trying to mislead the people saying everything is okay. Take the blinders off people !!!!! This is the real deal

    Reply

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