by Shawn Cumberbatch
Today’s unprecedented downgrade to “junk” by influential credit rating agency Standard & Poor’s is a “grim” and “dismal” sign for the Barbados economy and local businesses.
But Opposition Leader Owen Arthur feels it should also signal the calling of a general election in Barbados to allow his Barbados Labour Party to fix things, and herald the departure of a “callous” and “cavalier” Central Bank of Barbados Governor, Dr. DeLisle Worrell.
Arthur, flanked by his full economic team, called in the media this evening in response to a foreign and local currency ratings downgrade of the island by S&P, reflecting its opinion “that Barbados’ economic fundamentals continue to weaken”.
“There are institutional investors, people who are managing pension funds abroad, who have no lawful authority to invest people’s pension funds in junk. Every enterprise in Barbados will find itself in a position where its interest, cost of borrowing, could rise precisely because the sovereign rating of the country has been reduced to junk,” he warned.
“Barbados will also face quite considerable difficulties in being able to raise money on the international capital market, and certainly it will face increased costs in borrowing, and a lot of private investment, capital inflows that will normally flow into the country, can only be affected by the news that our status now has been reduced to junk.”
Arthur, who was Minister of Finance between September 1994 and January 2008, said “the downgrading of a country’s debt to junk status is without precedent in Barbados and it has implications that are profound”.
“The report on which this rating has been based makes very dismal and grim reading,” the BLP leader said.
“It speaks about an economy that is not stable, but an economy whose fundamentals are weakening, an economy that is facing pronounced competitive problems, … and an economy whose prospects are such that, unless very strong far reaching actions are taken, could face further downgrade by the rating agencies.
“The downgrade of a country’s status to junk cannot be taken lightly nor dismissed, and certainly not in the callous and cavalier way in which it has been dismissed by the Governor of the Central Bank of Barbados,” he added.
The Opposition Leader said “far reaching decisions” had to be made in light of the S&P action, and he urged Prime Minister Freundel Stuart to call elections now to allow this to take place.
“The best thing that can happen in the circumstances is that we should be allowed to put the election behind us. Call the election, let us get this behind us and let all of the fundamental decisions … about the country’s future be made in a period of calm and seriousness,” he said.
Arthur said the situation was “serious” and that “in all of the circumstances it would have been preferable had the Prime Minister of Barbados, the honourable Freundel Stuart, rather than the Governor of the Central Bank spoken to the people of Barbados at this time”.
He also knocked Worrell for what he considered the governor’s attempt “to trivialise this matter”.
“To try to cast doubt on the reports of Standard & Poor’s in the manner in which the governor of the Central Bank has sought to do is not helpful and in fact in my judgment can only worsen the situation because it would seem not only to imply, but to underscore the fact, that not only is the economy unsound, but the economy surely is in unsound hands,” he stated.
“This rating entirely reflects that Government’s economic policies are a catastrophic failure.” firstname.lastname@example.org