Barbados Central Bank Governor says no need to fear over ratings fall

Dr Worrell, who took up office at the beginning of this month, said that the future downgrade which the firm made reference to, simply meant that if Barbados wanted to borrow on the market, it would have to pay “a little” higher interest rate.(File photo)

BRIDGETOWN, Barbados, November 26, 2009 – Barbados’ new Central Bank Governor says there’s no need to worry about the recent downgrade in the country’s economic outlook by rating firm, Standard & Poor’s (S&P). In fact, Dr DeLisle Worrell says it doesn’t mean much considering Barbados is not seeking a loan on the international market.

Earlier this month, S&P lowered Barbados' outlook from stable to negative over concerns about public debt. It also warned of a further downgrade if government doesn't take steps the right steps to reverse the current situation.

Dr Worrell, who took up office at the beginning of this month, said that the future downgrade which the firm made reference to, simply meant that if Barbados wanted to borrow on the market, it would have to pay “a little” higher interest rate.

“But we don't want to borrow, so we are not going to do anything as a result of Standard & Poor's rating," he said yesterday after delivering a presentation on ‘Countercyclical Policy: What Is It, And Where Are Its Limitations’ at the Barbados Chamber of Commerce and Industry's monthly lunchtime lecture.

The government has opted to use other sources of funding, including providing low-risk government securities for investors and recently to borrow US$150 million in the Trinidad and Tobago capital market by way of a bond issue.

“We are going to do things which make sense in terms of stability of the macro economy, in terms of maintenance of adequate foreign exchange reserves. I don't know why people are so excited about Standard & Poor's,” Dr Worrell added, noting that the information which the firm releases is simply a regurgitation of what the Central Bank makes public at different times throughout the year.

Last month, Moody’s Investors Service lowered the Barbados government bond rating to the brink of junk territory – meaning debt default is highly likely and is viewed negatively by investors. Moody’s said that government debt has more than doubled since 2000.