Minister of Industry, International Business, Commerce and Small Business Development Donville Inniss is not losing any sleep over either the latest Standard & Poor’s (S&P) downgrade of the local economy or the 2016-2017 Global Competitiveness Report, which placed the island 72nd out of 138 countries.
However, a local economist believes the reports, when coupled with the latest World Bank assessment of the island, are cause for serious concern.
Late last month S&P lowered its long-term foreign and local currency sovereign ratings on Barbados to B- from B, saying it was concerned that the island’s fiscal adjustment programme again fell short of stemming another increase in the already high debt to Gross Domestic Product (GDP) ratio.
And just last week the World Economic Forum’s report, which assesses the competitiveness landscape of 138 countries, providing insight into the drivers of their productivity and prosperity, showed that Barbados had slipped 17 places since 2014. The report also listed several problematic factors, which hinders the smooth flow of doing business on the island, including “poor work ethic in the national labour force” and “inefficient Government bureaucracy”.
However, while not dismissing the Global Competitiveness Report or the latest S&P rating, Inniss made it clear during this morning’s launch of the Barbados International Business Association’s (BIBA) National Secondary Schools Quiz that he was not too focused on ratings.
“I certainly do not need any international report to tell me that Barbados can do better and must do better when it comes to business facilitation,” Inniss said.
He went on to warn that “we have so many bodies now around the world that seem to be fighting and competing to giving countries rankings and ratings”. Inniss therefore advised those who relied on such international reports to “step back a bit” and look at what was really behind these reports, including the authors and their “modus operandi”.
“Perhaps that will lead to a greater understanding and appreciation as to why so many of them seem to be coming around these days.”
However, in zeroing in on the findings of the Global Competitiveness Report, he agreed that Barbados’ competitiveness and general customer service needed to improve.
“Even if we were among the top five countries I would say we can do better. There is no room for complacency. Let us therefore not get too caught up in the rankings, but keep asking ourselves what are our internal yardsticks we must use to gauge our own strengths and successes going forward,” advised Inniss, who stressed that “when we sit back and wait on these reports we are not doing ourselves any favours”.
However, in a separate comment today, President of the Barbados Economic Society Jeremy Stephen warned that the recent negative rankings were only the tip of the iceberg.
“What is of interest, particularly in light of the recent slips that we are having in our sovereign debt ratings, and also with respect to the World Bank and how they are viewing us, is the fact that we have one of the worst macro-economic conditions or environments in the world.
“We currently stand at 129 out of a possible 138 countries [with respect to macro economic indicators in the Global Competitiveness Report],” Stephen said.
He listed the several key factors, which would have contributed to the unfavourable macro-economic environment.
“With respect to the individual areas that resulted in that ranking it goes as follows: We are currently 122nd in the world in terms of Government budget balances. In other words, we have one of the worse fiscal deficits on earth given our size. We are 127th in the world with respect to Government debt, essentially meaning we are the 11th most indebted country in the world with 103 per cent of GDP and climbing. Our gross national saving is one of the lowest in the world and again we are the 11th poorest country with respect to savings, which currently stands at 8.4 per cent of GDP. We also currently have the lowest inflation rate in the world, which stands at 0.5 per cent per annum, “ the reputed economist said.
He argued that the competiveness rating and the two most recent downgrades did not augur well for confidence in Barbados’ ability to repay external debts.
“Our economy from a public debt perspective is worsening. Our ability to repay our external debt or even our local debt that is owned by foreigners is increasing becoming challenging. Interest rates are expected to rise on external debt…
“There are even rumours of companies that are advising clients on selling their Barbadian domestic debt, particularly on very long term bonds. When you couple this with the macro-environment is decreasingly in competitiveness even though it is still more competitive than the average level in Latin America and the Caribbean, it is not a very good look for us externally,” stressed Stephen who had earlier told Barbados TODAY that the latest S&P downgrade was inevitable, and was “very much in line with what [it’s fellow international ratings agency] Moody’s has been thinking about Barbados for some time.