The local private sector said it was “dismayed” at the latest downgrade of the country’s bond rating by international ratings agency Moody’s Investors Service, and that it took little comfort from the stable outlook.
Over the weekend a statement from Moody’s said the decision to downgrade the island’s Issuer and Bond Ratings to Caa1 from B3 and revise the outlook to stable from negative was driven by low levels of foreign exchange reserves and weak funding conditions, as well as slow progress towards achieving fiscal consolidation consistent with a suitable debt trajectory.
Chairman of the Barbados Private Sector Association (BPSA) Alex McDonald told Barbados TODAY the Issuer Rating downgrade was “almost like a slap in the face” since it virtually nullified the stable outlook.
“But surely they were very dismayed. They were hopeful that the talk of growth and so on would have helped to move the ratings to a more positive sign,” McDonald said of the reaction of the BPSA membership.
The island recorded 0.5 per cent economic growth in 2015 and had about 14 weeks of foreign reserves, according to the Central Bank.
McDonald told Barbados TODAY, ideally the business community would have liked to see movements upwards.
However, he said no movement at all would have been better than a downgrade.
“We would prefer to have seen no movement rather than a movement downward. And the movement from [negative] to stable is small comfort at this time to be honest,” he said.
The BPSA Chairman warned that the country could not withstand many more of these negative reviews and called for a redoubling of efforts to deal with the national debt.
McDonald said the assessment suggested that some reform was necessary, adding that the private sector had repeatedly called for “the consultative process to really get into the belly of what this beast is” and to collectively chart a way forward.
“We have to tackle the factors that cause the negative assessment just as we have to start tackling the factors of what gives us a poor rating in the doing business schedule. We have to tackle the roots of those things and not deal with the symptoms and not have a knee-jerk reaction,” he warned.
He also told Barbados TODAY that he was looking forward to Minister of Finance Chris Sinckler’s reaction to the Moody report.
“We have read the Opposition’s comments [and] we have read Moody’s commentary on the reasons for their [Moody’s] position. We will wait anxiously to hear the Minister of Finance’s assessment,” he said.