Minister of Finance Chris Sinckler is seemingly not surprised by this country’s latest economic downgrade.
Earlier today the international ratings agency Standard & Poor’s lowered its long-term foreign and local currency sovereign credit ratings on Barbados to ‘CCC+’ from ‘B-’, while warning that the sustainability of the Barbados dollar was now under threat, amid Government’s continued reliance on the Central Bank to finance its deficit.
S&P also lowered its short-term foreign and local currency sovereign credit ratings to ‘C’ from ‘B’, while issuing a negative outlook for the island, which it said reflects its view that Government was either unable or unwilling to take timely steps to redress the situation.
Following is the full statement issued by Sinckler’s Ministry in response to S&P:
“The Ministry of Finance and Economic Affairs notes with regret the recent downgrade of Barbados’ credit rating by rating agency Standard and Poor’s. The downgrade by Standard and Poor’s lowers the credit rating one notch, which puts their rating in line with that of Moody’s.
The downgrade was expected and largely driven by the decline in our international reserves reported in the recent Central Bank Economic Report. The decline in the reserves was largely due to legal and administrative delays in public inflows linked to various projects as has been explained before. The Government’s expectation is that this situation will begin to ease shortly leading to a restoration of reserves to more comfortable levels.
In the coming week, Government will release its fiscal outturn figures for the financial year ending March 2017 and Estimates for the coming Financial Year 2017-2018. In both cases, it will be noticed that not only has Government met its fiscal target for the current fiscal year, but it has planned its Budget to realize a further reduction in the deficit for the coming fiscal year. This should ease Government’s financing requirements for the coming financial year and lead to a claw back in the level of Central Bank accommodation of the fiscal deficit going forward.
Apart from these gains, Government expects growth levels in the domestic economy to continue to accelerate behind stronger performances in key sectors such as tourism, international business and financial services, construction, and wholesale and retail services. This progress is already being seen this year and forecasts are for at least two per cent growth for 2017.
Throughout this process, the Government of Barbados remains committed to sensible and responsible fiscal adjustment that achieves our ultimate objectives of a balanced budget, stable and growing reserves, increased economic output and a cohesive integrated social fabric that promotes the well-being of all its citizens while protecting the most vulnerable. ”