In Barbados: Credit Rating Safe

17 October 2011


Central Bank of Barbados Governor says of BBB- rating: No possible chance of upgrade until growth prospects increase. So, no downgrade…but nothing better either.

“Barbados’ credit rating is not in further danger of another downgrade.”

That’s what Dr. Delisle Worrell, Governor of Central Bank of Barbados, said at last week’s press conference to review the Barbados Economy for the first nine months of 2011.

He stated, “I do not expect another downgrade once we are able to attain targets in the Government’s Medium Term Fiscal Strategy.”

In June, Barbados was dealt a hard blow when Moody’s Investors Service lowered its domestic currency rating on Barbados to the brink of junk. The country’s rating was downgraded by one notch to Baa3, the lowest investment-grade level.

Concerns were highlighted about the island nation’s ability to absorb high levels of government debt issuance as the already large deficit was expected to rise.

According to Worrell, “Until the growth prospects increase [there] is not a possible chance of an upgrade. However, the provisional data for the period April to September (the first six months of the current fiscal year) show the fiscal deficit from 9.6 percent of GDP last year to 5.3 per cent. We are not in a comfort zone as yet because it does depend on the various spending units not exceeding the targets given.”

He reiterated, “In terms of dealing with the fiscal deficit, we need to stick to the targets that have been set and we need to stick to the expenditure restrictions which were announced in the last Budget. The revenue measures which were taken last year have at last begun to manifest themselves in an increase, in particular, in our VAT receipts. This is something we review every month; we look at our foreign exchange situation, fiscal situation, balance of payments… then we decide if further adjustments are needed.”

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