Moody’s Investors Service on Thursday downgraded Barbados’ credit rating to Ba1, into junk territory, citing the Caribbean country’s lukewarm economy and rising government debt levels.
The rating also carries a negative outlook, with the agency saying that the country’s economic prospects remain weak.
“Moody’s believes that the country’s growth prospects remain very limited due to its deteriorating competitiveness and declining productivity coupled with heavy dependence on tourism, particularly from the United Kingdom and the United States,” Moody’s said in a statement.
(REUTERS)
Meantime…..
In a press release issued following the downgrade, Finance Minister Christopher Sinckler says the most recent ratings downgrade by Moody’s Investors Service comes as no surprise to the Ministry of Finance or in the Government, as a whole.”
He explained that it was generally expected that since Standard and Poor’s had made their adjustment to the country’s credit rating some months ago, it was altogether likely that Moody’s would align their rating accordingly.
“Naturally, the continued weak global economic recovery, particularly among our largest trading partners in the USA, UK and most of CARICOM, has worked to compound the negativity of an already difficult economic situation, which heavily undermined Barbados’ prospects for a speedy recovery in growth. And, in spite of what we have heard, and will continue to hear, the knock-on effects of this environment on our fiscal and economic situation remain clear and unmistakable” the Finance Minister pointed out.
He said: “While we reflect on Moody’s overall ratings opinion on Barbados, we can generally deduce the following from their advice:
1. The worst of the economy and fiscal deterioration is behind Barbados
2. Barbados’ prospects for short term high growth levels will remain challenged because of the weaknesses in our major trading partner economies
3. These challenges are likely to affect our capacity for faster fiscal consolidation, notwithstanding the fact that efforts to strengthen our fiscal position have been successful thus far
4. Government must stay the course on its fiscal consolidation programme, strengthening it wherever possible, rather abandoning it.
5. To attempt to introduce counter-cyclical fiscal measures (tax eases) to stimulate domestically driven growth will reverse the gains made so far by the country to turn around the situation and make matters much worse fiscally and economically
6. Our foreign reserves levels remain adequate to satisfy our current and immediate future needs.”
To this extent, Minister Sinckler called on Barbadians to “continue to stay the course on our fiscal consolidation programme, seek to improve our levels of productivity, and move ahead hastily with our programme for restructuring the Barbados economy.”
(BGIS)
