Surprise, surprise!

In keeping with what is seemingly par for the course in the last ten years, Barbados’ economy has received yet another downgrade.

This time it comes from regional credit rating agency Caribbean Information and Credit Rating Services Limited (CariCRIS), which has handed the country its 23rd downgrade since the Democratic Labour Party took office in 2008.

In a media release on Tuesday, CariCRIS reported that it had lowered the island’s foreign currency rating by one notch from CariBBB+ to CariBBB- and its local currency rating from CariBBB+ to CariBBB.

While suggesting that the island’s creditworthiness was still adequate, the regional rating agency said the decision to downgrade the island was driven by the sustained reduction in net international reserves which had fallen to the equivalent of 2.2 months of import cover as at September 2017, below the internationally recognized minimum of three months or 12 weeks  import cover, with foreign currency commitments, including the Government’s amortized debt commitments, outstripping foreign currency inflows.

The development occurs just three months after New York based Standard & Poor’s lowered the country’s credit rating from CCC- to CCC, warning that there is now a higher risk associated with maintaining the currency peg to the US dollar.

Not surprised by the latest downgrade, economist Jeremy Stephen charged that Government had done very little to correct the recurring problem since the country received its first downgrade.

The University of the West Indies lecturer explained that despite recent upticks in the global economy, Barbados has continued to fail miserably with respect to shoring up its foreign reserves.

“Our reserves continue to fall in light of a very strong global economy. It is strange that in Barbados we believe that the global economy is struggling when in reality that is not the truth. Over the last ten years there hasn’t been a better time in terms of global growth for investors.

“We have also been harming ourselves with very ill-timed fiscal policies and late implementation of fiscal policies,” Stephen said in response to the latest blow to Government’s efforts to revive confidence in the economy and on the heels of last May’s Budget presentation in which $542 million in austerity measures were announced.

Among them the controversial hike in the National Social Responsibility Levy that has been met with outcry from every sector of the economy, but has failed to meet its revenue targets.

The tax was increased from two to ten per cent of the customs value of locally manufactured and imported goods, as Government sought to achieve a balanced budget and to wipe out its overall deficit. However, this remains an elusive dream.

Nonetheless, the latest ratings news was not all bad for Barbados as CariCRIS also revised its negative outlook on the island to stable.

“Our decision to revise the outlook to stable is based on our expectation for a number of tourism related investment projects that are to be completed over the next two years, [which] would likely boost economic activity and foreign exchange earnings. Completion of these projects, together with a number of recently introduced fiscal measures aimed at fiscal consolidation and reduction of foreign exchange consumption, should serve to reverse the decline in reserves and rebuild the country’s external account position,” the release stated.

In response, Stephen said while he was heartened by this vote of confidence, the expected uptick could easily change with a shift in some external factors.

“The problem is that you think that the Government will be able to execute or bring certain projects to fruition, but the argument could be made that they missed the boat with regards to certain projects related to tourism. Case in point would be the Hyatt Hotel [which is embroiled in a legal battle]. It could also be argued that by the time it is completed, the global economy will begin to make a turn for the worse. It is quite a feasible assumption because everyone knows that globally we a due a recession after six of seven years of unabated growth,” he cautioned. 
colvillemounsey@barbadostoday.bb

16 Responses to Surprise, surprise!

  1. Pat Clarke January 11, 2018 at 2:30 am

    At Least 50,000 Barbadians should be on the streets demanding that this Government call an election or resign. What are we waiting for? 2.2 months of reserves? The s**t on the South Shore will pale in comparison when it reaches the point when there are no more reserves. And to think there are still a lot of you out there who believe that this Government deserves to stay in power. Give me break!

    Reply
    • John Everatt January 11, 2018 at 5:46 am

      Totally agree. The south coast sewage issues are a disaster but the economy is even worse. We have gastro happening all over the south coast due to the sewage but the economic decisions of this government will bring us to a total halt.

      Reply
    • Tom January 11, 2018 at 10:25 am

      I also agree. What reckless mismanagement by all concerned.They are stuck in an outdated rut with no new ideas.
      They certainly should not be rewarded for their omnishambles and failures and should be separated from their gold-plated pensions. What is required is coherent leadership with a focus on national interest, not party or electoral interest.

      Reply
    • straight talk January 11, 2018 at 7:00 pm

      that would never happen

      Reply
  2. Darson January 11, 2018 at 8:01 am

    We will not leave any mess for others to clean up : Not our Style or way of doing things , we do not run or shun away from problems facing this Country , this is a mess, we did not create it and we will fix it and do it right once and for the good of all .
    The Boys in Blue and Yellow are working ,

    Reply
    • Reginald Dwight January 11, 2018 at 8:22 am

      Do you need another 10 years to fix it? How about 15? Will “the boys in blue and yellow” still be blaming the previous administration after all that time?

      Reply
    • hcalndre January 11, 2018 at 12:46 pm

      @Darson; has there been anything that this inept government took responsibilities for, since they took office? Taxes are the only thing that they can take credit for? and demanding the 10% be returned to their bank account.

      Reply
  3. luther thorne January 11, 2018 at 8:27 am

    Those who conclude that this Govt should stay are bewitched, are lackeys, syncophants , massive yard fowls, selfish , drawing on the public purse, driving the ML cars and just do not care about anyone . Look and see who driving the ML cars. They are mercenary in their approach, politically biased and polarizing. They are the ones behind the lies , fake statements, propaganda and the DLP Consortium. They represent the core of the DLP and their approach and attitudes are reflected right here on the pages of this Blog.. So they will sing for their supper. Its Disgusting !! They dont care about the Country , their concern is just how much money they can get and how important they feel.

    . The Bewitched people are seen in the likes of the St.John people who are afflicted by the Barrow Syndrome. They live in a reality that has nothing to do with today ‘ s reality. They are in a Time Warp and are stuck between 1961and 1976. They think Barrow is still running.

    Large numbers of the populace must therefore counter this nonsense by demonstrating clearly that they have had enough.

    Reply
    • Carson C. Cadogan January 11, 2018 at 9:05 am

      LUTHER

      There is nothing in your comment which is correct.

      Purely political statement meaning at all.

      Reply
      • hcalndre January 11, 2018 at 1:13 pm

        @CCC; rigor mortis has stepped in that means that the patient is dead and nothing more can be done for that patient, can`t you smell.

        Reply
  4. John C Chapman January 11, 2018 at 10:26 am

    What do youexpect the changes cant happen over night and quicklyso we will get moere downgrades

    Reply
  5. milli watt January 11, 2018 at 11:05 am

    this shaping nicely……..although I got a problem wid using September 2017 data (just saying). suspect we less than 8 weeks now. you could not have written a better Hollywood script.

    Reply
  6. Ossie Moore January 11, 2018 at 11:52 am

    Woona wid woona big mout talking ’bout Republic!! Eba sence then all kinda down grade start appearing’ bout here so! Now look up north in St Lucy; Kelly up dey in de Breadfruit bar saying I don’t care if dem talk ’bout republic I know dem talking a good breadfruit cou cou wid turpit, cucumber pickle and a piece o’ red skin sweet potato, and with a big smile he replies “Now dat is public up hey in Moon Town !

    Reply
  7. Tony Webster January 11, 2018 at 12:42 pm

    @Luther Thorne: Why are you being so kind, Sir?
    My suggestion is a “reality enema” for all so afflicted.

    Reply
  8. Cranebeach January 11, 2018 at 2:30 pm

    This is the result of progressive mismanagement by both major political parties. The future doesn’t look too bright either. Sad indeed.

    Reply
  9. Belfast January 11, 2018 at 2:49 pm

    Not only is Stuart taking the election down to the wire, he has also taken Barbados down to the wire.

    Reply

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