Down again!

S&P downgrades Barbados again

In what seems like a reprise of a familiar, yet unwelcome theme, Barbados has been slapped with yet another downgrade by international ratings agency Standard & Poor’s (S&P), which today warned that there is now a higher risk associated with maintaining the country’s $2 to US$1 exchange rate.

In addition, the New York-based agency is predicting that Government will fall short of balancing the budget this year and the next due to a range of factors, including a weak track record of execution, “the likely overestimation of one-off revenues”, and the fact that certain political considerations would have to be made as an election year approaches.

Reference to “one-off revenues” appears to be a criticism of the Freundel Stuart administration’s National Social Responsibility Levy (NSRL), introduced last September at two per cent of the customs value of all imports, with some exceptions, and locally manufactured goods, with the expectation of raising more than $140 million which Government had said would have gone towards funding the island’s health care and sanitation services.

When Minister of Finance Chris Sinckler introduced the 2017 Budget on May 30, he announced that the levy would rise to ten per cent, as part of tax measures to close a $537 million deficit.

Warning of the possibility of another downgrade within the next 12 months, S&P said in a statement today that it was lowering the long-term local currency sovereign credit rating on the country to ‘CCC’ from ‘CCC+’, while affirming its long-term foreign currency sovereign rating at ‘CCC+’. However, the outlook on both long-term ratings is negative.

With Government’s deficit estimated at six per cent, and overall debt at about 140 per cent of gross domestic product (GDP) – one of the highest in Latin America and the Caribbean – the ratings agency urged the Stuart administration to address its policy challenges.

“Barbados’ policy challenges include high general Government debt, deficits, and debt servicing requirements; limited appetite for private-sector financing; and a low level of international reserves raising the risk to sustainability of the peg to the US dollar,” S&P said.

“In our opinion, monetary financing to the central Government is at odds with sustaining Barbados’ currency peg to the dollar, and it significantly curtails the Central Bank’s ability to act as a lender of last resort in the financial system. Low inflation is a reflection of global conditions rather than effective monetary policy execution given the fixed exchange-rate regime,” S&P said in its rationale.

In announcing $542 million worth of austerity measures in his Financial Statement and Budgetary Proposals, Sinckler had said that Government would overcome a high deficit of $537.6 million, achieving a small surplus of $4.4 million.

The tax measures included the steep rise in the NSRL, the introduction of a two per cent tax on all foreign exchange transactions and increases in the duties on fuel, all of which S&P described as “among the most significant to date” in an effort to balance the Budget.

“However, a weak track record of execution, the introduction of the measures half way into the fiscal year, the likely overestimation of one-off revenues, and political considerations while mobbing to an election year in 2018 leads us to assume that the measures will fall short of balancing Barbados’ Budget this year and next,” it said, adding that it expected a general deficit of four per cent of GDP during the 2017 – 2020 period.

The ratings agency warned that should Government fail to advance measures to significantly lower its high fiscal deficit, strengthen its external liquidity, and reverse its low level of international reserves, there could be further pressure on availability of deficit financing, albeit from official or private creditors.

S&P further stressed that this situation was also posing challenges to the fixed exchange rate regime, while at the same time pointing out that economic growth was being held back by recurrent tourism project delays, higher taxes, low private sector confidence and consumption, and a significant level of red tape, which weakens Barbados’ overall economic profile.

However, while predicting further downgrade, the ratings agency left room for an improved rating, should the administration achieve certain targets.

“We could revise the outlook to stable over the next 12 months if the Government succeeds in balancing its fiscal budget, either from implementation of fiscal measures or a prolonged rebound in growth; improves its access to financing from private creditors locally and globally; and stabilizes the country’s external vulnerabilities and bolsters international reserves,” the report said.

Despite the challenges, S&P said Barbados was still considered one of the richest Caribbean countries with per capita GDP for this year projected at US$16,771.

It also highlighted the expectation that the tourism industry would continue its stellar performance this year, after contributing to the reduction of the deficit last year, together with low oil prices and low private sector demand.

“Our base case expects that tourism continues to perform adequately, and that low oil prices and the National Social Responsibility Levy further discouraging consumption (and imports) would result in an average current account deficit of four per cent during 2017-2019. Foreign direct investment won’t be able to fully finance the current account deficit, which should keep pressure on the level of international reserves during 2017-2019,” S&P said.

marlonmadden@barbadostoday.bb

53 Responses to Down again!

  1. James Austin Bynoe
    James Austin Bynoe September 27, 2017 at 11:13 pm

    #20 …. the 20th downgrade under this government … guess we will need a bit more sugar for the DLP koolaid.

    Reply
  2. Ali Baba
    Ali Baba September 27, 2017 at 11:31 pm

    AN WHAT IS THE CAPITOL OF BARBADOS?…..DOWNGRADES

    Reply
  3. Joan Brome
    Joan Brome September 27, 2017 at 11:38 pm

    Hang down ya head Tom Dooley.
    Hang down ya head and cry
    Hang down ya head Tom Dooley
    Poor Boy were are going to die.

    Reply
  4. Cathy Jessamy-Babb
    Cathy Jessamy-Babb September 27, 2017 at 11:58 pm

    A game.

    Reply
  5. Sheldine Dyall
    Sheldine Dyall September 28, 2017 at 12:04 am

    All the taxation on this nation and we still continue to fail.

    Reply
    • Ali Baba
      Ali Baba September 28, 2017 at 6:19 am

      SIMPLE WHERE ALL DE MONEY GONE….

      Reply
    • Marva Lashley-Todd
      Marva Lashley-Todd September 28, 2017 at 6:58 am

      Ali Baba They keeping it for elections. They have already allocated 4,6 million to clean up the road in Barbados

      Reply
    • Ali Baba
      Ali Baba September 28, 2017 at 7:21 am

      Marva Lashley-Todd IT STILL CAN’T SAVE DUM, THE PEOPLE HAVE TO COME OUT DETERMINE, ANYBODY ELSE EXCEPT DEM

      Reply
    • Philippa Joseph
      Philippa Joseph September 28, 2017 at 8:47 am

      Ali Baba all de money in de hairy bank lol i guess

      Reply
    • Gearbox1964 September 28, 2017 at 12:37 pm

      Check into DEM personal bank accounts…local and abroad!

      Reply
  6. John Everatt September 28, 2017 at 12:28 am

    I think that the “one-off revenues” refers to projected revenues such as Hyatt, Sam Lord’s Castle and the sale of the government owned fuel storage facilities which of course never came to pass. I don’t think it is referring to NSRL or other taxes that have been thrown at us.

    Reply
  7. Ryan R A Charles
    Ryan R A Charles September 28, 2017 at 12:30 am

    I had enough of this ass

    Reply
  8. Sean King
    Sean King September 28, 2017 at 1:04 am

    We accustom to this by now,these people don’t even care anymore. Destroying the economy is what he is good at.All the measures he introducing and things continue to get worse..

    Reply
  9. Buun September 28, 2017 at 1:22 am

    Of course the DLP will call this FAKE NEWS

    Reply
  10. Brigitte Adams
    Brigitte Adams September 28, 2017 at 1:27 am

    Sorry the writing is on the wall for DLP.

    Reply
  11. Sweetpea Darling
    Sweetpea Darling September 28, 2017 at 2:49 am

    Chrissy head down too

    Reply
  12. Peter R Rock
    Peter R Rock September 28, 2017 at 3:36 am

    Fake news Chris….the blp really out to get you

    Reply
  13. Carol T Hinds
    Carol T Hinds September 28, 2017 at 4:51 am

    Lmaoooooo apparently our capital has a new name

    Reply
  14. Epaphras D. Williams
    Epaphras D. Williams September 28, 2017 at 5:11 am

    Apparently you have no true friends in high or low places. Read what the unjust steward did in St.Luke 17 of the Holy The Holy Bible and act accordingly.

    Reply
  15. Kim Went
    Kim Went September 28, 2017 at 5:22 am

    We will never get an upgrade…… not as long as the DLP is running this country. Political…… it is a game and no one is surprised by these downgrades anymore.

    Reply
  16. Angela Griffith
    Angela Griffith September 28, 2017 at 5:25 am

    I hope so

    Reply
  17. Jonathan Gonsalves
    Jonathan Gonsalves September 28, 2017 at 5:50 am

    Call elections now!

    Reply
  18. Santini More
    Santini More September 28, 2017 at 5:57 am

    If we were to ever publish a dictionary in Barbados the entry for the word ‘Failure’ would read: See Sinkler.

    Reply
  19. Ali Baba
    Ali Baba September 28, 2017 at 6:05 am

    # 24 WE AT NOW AND MOODYS COMING IN WHA LOSS

    Reply
  20. Anton Brown
    Anton Brown September 28, 2017 at 6:20 am

    The PM of sweet Barbados really ruin Barbados. I have to ask myself, how was it he was allowed to stay in office for close to 10 years. As citizens of any country, it’s everyone right and responsibility to be active in government for themselves. Inactivity in government or choosing to remain silent as government do as they please does not benefit anyone. You can’t complain if your are not an active member in government. Look, I am so sick of the massive/ over- all population continue to be destroyed and ruin by the very same ppl elected to protect and govern them. Have we all become program to be robotic and just move through society dead as a few individual elected member rule, ruin, dictate and destroy us?
    There is no way that Barbados should be on an economic spiral downfall. The current admistratiom sold it out, leased it out and just completely gave Barbados away for free.
    If Barbados continue on the path it’s currently in, foreign investor will eventually buy it up at a discount, foreigners will then begin to migrate at a higher rate than they are now and the ordinary Bajan will become a minority with little or no power because power is in the money and control of the very land by which they were born and raise in.
    It’s time for the ordinary Bajan to seek change or rather demand change and become an active voice and member in government. Sitting at home complainomg not being proactive is no longer an option. What the point of complaining just to complain, you complain when you are fed up, when one is fed up they rise up.
    People of Barbados is just as much to blame as the government due to their inability to take a stand to the social economic injustice affecting them.
    Seriously 10 years of the same government, who was giving the ok to sell the country out. Barbados have very foreign national living in it, so explain why the economy continues to go downward. Hell as a child living in Barbados before we sold it to the Chinese, the French, allowed the Americans to come in and buy up land and live, partnered up with every Tom, Dick and Harry, Barbados was 1000 x better than it currently is now, proving selling out yourself does more damage than good.
    What money did these people bring into the country, seems the only thing they did was found a PM foolish enough to allow them to get richer, live cheaper in sunshine while his ppl pay the price in one form or the other.

    Reply
    • Sandy Perkins
      Sandy Perkins September 28, 2017 at 7:14 am

      You could not have said it better.We have allowed this to happen as really all we do is complain and have done nothing about it.We in this little island are suffering at the hands of these vipers.The DLP really sold us out,literally.I feel all our pain,and it hurts.

      Reply
    • Eddy Murray
      Eddy Murray September 28, 2017 at 7:29 am

      Anton Brown, you and I know it is a fear factor that have these people so. When I come out against the government if you pay me when the week or you going to give me a salary or better yet pay my mortgage, when I loss my job or work.

      Reply
  21. Sandy Perkins
    Sandy Perkins September 28, 2017 at 6:21 am

    Sickliar,who ya going too blame this on,the BLP.We would not be in this situation if all of the eager 11 hands were not dirty.No money in the barbados treasury but in the uk and off shore accounts,give barbados back their blasted money.All of u should be locked to ass up,one downgrade after the next.Barbados lets pray to Our Lord that these vipers will soon be kicked out of office,it;s depressing.

    Reply
  22. Max Carter
    Max Carter September 28, 2017 at 7:15 am

    wait crapo smoking a pipe we in duts guts

    Reply
  23. Lionel Gittens
    Lionel Gittens September 28, 2017 at 7:33 am

    These people are not worried about no elections. They already know what the outcome will be. And it’s going to be tough on the other Government. Not only the other Government but the country.

    Reply
  24. Carlos Holligan
    Carlos Holligan September 28, 2017 at 7:36 am

    Name two things that coming down (the rain and barbados gades)

    Reply
  25. Arthur Collymore
    Arthur Collymore September 28, 2017 at 7:43 am

    PM Stuart will continue to be unmoved, unfazed, unresponsive & not be unnecessarily bothered by anything S&P has to say. Chris will continue to be his eminent MoF despite his obvious failings as the country sinks to abysmal oceanic depths. The ruination of a once prosperous country matters little to him. What matters most is that he was one of the chosen 7.

    Reply
  26. Sean Maynard
    Sean Maynard September 28, 2017 at 7:50 am

    Fire him

    Reply
  27. roger headley September 28, 2017 at 8:43 am

    Carson C Cadogan, where are you? the persons responsible for issuing the downgrades are most likely white. “Buse them Carson, buse them.” Lolllll

    Reply
  28. Angela September 28, 2017 at 8:56 am

    I wonder who will downgrade Dominica and Barbuda

    Reply
  29. Michael Crichlow
    Michael Crichlow September 28, 2017 at 9:06 am

    Option #1 clean the house on election day.. it’s water under the bridge…..we cannot recall yesterday

    Reply
  30. Sue Donym September 28, 2017 at 9:30 am

    In an economy where the tourism sector had a stellar performance, why aren’t the super stars paying their fair share of taxes. Poor reasoning compounded by a further raid on the incomes of those already reeling. But if you’re fortunate enough to know your pension is as good as in the bank and you get thanked for every successful lobby, it’s easy to come to the people with predictions of prosperity.

    Reply
  31. Denton Crichlow
    Denton Crichlow September 28, 2017 at 9:57 am

    This is so hurtful

    Reply
  32. Donild Trimp September 28, 2017 at 9:57 am

    Some of you posters on here are just nay-sayers always looking for anything that is negative to satisfy your agendas.

    The following statement is in the article:

    “Despite the challenges, S&P said Barbados was still considered one of the richest Caribbean countries with per capita GDP for this year projected at US$16,771”.

    Did any of you noticed that statement? I doubt it very much.

    Some of you are so one sided in your views that you cannot deal with issues from an objective point of view.

    Reply
    • Sue Donym September 28, 2017 at 10:16 am

      @Donild Trimp, a Kyffin Simpson or Charles Williams in the calculation will make the per capita look healthy. Doesn’t mean that the majority are well off. In real life it’s not evenly distributed, just a comparative tool.

      Reply
  33. Alex Alleyne September 28, 2017 at 10:04 am

    @DP, how much of that US$16,771 goes to CHEFETTE.

    Reply
  34. Ossie Moore September 28, 2017 at 10:52 am

    I know wana could talk yuh talk but I bringing out a brand new Mule cart fuh muh Christmas it even got L E D head lamps and blue tooth sterio on the fly!

    Reply
  35. charjoy September 28, 2017 at 11:13 am

    @Ossie Moore yea and it would cost u less…….lollll

    Reply
  36. Donild Trimp September 28, 2017 at 3:12 pm

    @ Sue Donym –

    I did not write the article neither am I agreeing with what is written in the article.

    All I am saying is that we all can find snippets from the article to bolster our own point of view.

    If you are going to believe the negative aspects of the report, why not believe the positive aspects als

    Reply
    • Sue Donym September 28, 2017 at 3:37 pm

      @Donild Trimp, I’m not disputing the figures in the report, but certainly you’re not thinking that that means that every person has access to US$16,771?
      Next, that amount is said to be a projection.
      And before you get too excited, you might want to know how it stacks up alongside other countries that we rank with developmentally. Surely if we’re going down, others are rising above us.

      Reply

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