Former Prime Minister Owen Arthur is warning that Government’s massive spending could trigger more credit rating downgrades.
He issued the caution as debate continued on the 2015/2016 Estimates of Revenue and Expenditure in the House of Assembly today, noting that Government’s expenditure was $1.7 billion more than its revenue.
“Once it remains at that exalted level, there will be continuous downgrades of the Barbados Government debt. What is in the Estimates now, before we make adjustments, can lead to a further downgrade of the Government’s debt, which is already at a level of junk,” the former Minister of Finance cautioned.
He contended that in order for the island to restore its credit rating to where it should be, it had to make an adjustment of about $600 million to public finances.
Arthur referred to Governor of the Central Bank Dr DeLisle Worrell’s statement that it would take at least $170 million to get the economy back on track.
However, he added: “Getting back on track is not changing the junk status [of the sovereign rating]. It makes no sense to bring proposals that are simply going to keep the expenditure where they are; and that will not suffice to help us bring down and restore confidence in the economy.”
The St Peter MP said any discussion on reducing expenditure had to take into account the restoration of confidence and of the island’s investment grade.
“Confidence cannot be restored if policies that cannot be sustained are presented only for popular political purposes. People will see through it,” Arthur contended.