BRIDGETOWN, Barbados, Wednesday January 11, 2017 – Less than two weeks into 2017, Barbados has been hit by another ratings downgrade.
Concerned that government continues to finance the country’s high debt and deficit through the printing of money, the Caribbean Information and Credit Rating Services Limited (CariCRIS) yesterday lowered its ratings on the US$300 million debt issue of the government and foreign and local currency rating by one notch. The ratings move from CariBBB+ and CariA- respectively, to CariBBB and CariBBB+.
The regional rating agency said in a release issued yesterday that the action was taken based on available public information, as the Freundel Stuart administration had failed to meet its requests for its regular onsite annual surveillance meetings.
A negative outlook has also been assigned to the ratings.
“The downward adjustment of Barbados’ ratings and the negative outlook assigned are driven by concerns over the continued high fiscal deficit and increasing debt burden, which is being financed by the printing of money, creating a challenge for maintaining the fixed exchange rate, and by the delay in several tourism related foreign direct investments (FDI) projects which may temper economic growth,” CariCRIS said.
It also pointed out that even though fiscal consolidation has been a top priority for the Government of Barbados, “not enough progress has been made thus far”.
“While the primary balance has been in surplus for the last two fiscal years and continues to be so in this fiscal year, the large debt and interest burdens have become intractable, pushing deficits and exacerbating the problem,” it explained.
“Additionally, the fixed exchange rate is under threat of revaluation due to the printing of money to finance the fiscal deficit while the continued delay in tourism-related FDIs such as the luxury Hyatt hotel may create a challenge for accelerating much needed growth,” it added.
The announcement by CariCRIS comes as a further blow to Government, which has been accused of serious economic mismanagement by the Opposition in the wake 17 previous downgrades the country has suffered – mostly by the international credit ratings agencies Moody’s and Standard & Poor’s – since the ruling Democratic Labour Party came to power in 2008. (Barbados Today)