International ratings agency Standard & Poor’s (S&P) says it is maintaining its outlook on Barbados in light of the recent Financial Statement and Budgetary Proposals presented by Minister of Finance Chris Sinckler.
Back in March when it downgraded the country to ‘CCC+/C’, S&P had suggested that it could revise Barbados’ outlook to stable if positive results were seen in a number of areas.
However, following Sinckler’s May 30 Budget in which he announced a whopping $542 million in austerity measures with a view to erasing a $537.6 million deficit, the New York-based credit ratings agency told Barbados TODAY its position on Barbados’ economic situation remained the same.
“We could revise the outlook to stable within 12 months if the Government succeeds in stemming further slippage in its fiscal accounts – be it from implementation of fiscal measures or stronger than expected rebound in growth,” S&P said in response to questions posed by Barbados TODAY.
S&P however said it continues to actively monitor the island’s fiscal situation with a view to recording any improvements in its access to financing, especially from private creditors locally and globally; and to accessing whether it had adequately stabilized its external vulnerabilities and bolstered its international reserves, which stood at $705.4 million or 10.7 weeks of imports at the end of the first quarter.
In its March report, S&P had warned that the levels of the international reserves reflected “heightened challenges for policy implementation, the unsustainability of the peg to the US dollar, and underpin expected weaker growth prospects in Barbados”.
And with Government currently faced with a massive debt of over 105 per cent of gross domestic product (GDP) up to the end of March this year, it had also raised concern about Government’s overall ability to meet its debt servicing commitments given its high fiscal deficit, limited access to private sector funding in the local market, as well as a decline in external funding and low foreign exchange reserves.
As a result, S&P had lowered its long-term foreign and local currency sovereign ratings on Barbados to CCC+ from B-.
“The outlook is negative. We also lowered the short-term ratings to C from B. At the same time, we lowered our transfer and convertibility assessment for Barbados to CCC+ from B-,” it had said at the time.
Another review is due within the next nine months.