Acting Prime Minister and Minister of Tourism Richard Sealy says the recent downgrade by international ratings agency Standard & Poor’s (S&P) should not be ignored.
At the same time, Sealy does not expect any tourism fallout as a result of S&P’s lowering of the long-term local currency sovereign credit rating on the country to ‘CCC’ from ‘CCC+, while affirming its long-term foreign currency sovereign rating at ‘CCC+’.
However, even though S&P has said that the outlook on both long-term ratings is negative, Sealy does not expect the latest downgrade to have a direct impact on the vital tourism sector.
In fact, delivering the weekly Astor B Watts lunchtime lecture at the Democratic Labour Party’s George Street headquarters on Friday, he pointed to a number of current and pending investments in the sector, arguing that while it was expected that investors would look at the country’s overall investment grade, he did not see it causing them to hold back.
“Certainly they will look at the investment grade, that is only natural and I am not naive to that, but I would like to think that it is not only what the investment says, it is what the Government of the country is doing,” he said.
The Acting Prime Minister said he was satisfied that Government had been creating the enabling environment for investment in the sector, though he was not prepared to dismiss the downgrade out of hand.
“The Government has done its part. There are some other things that we have to do and I am certain that on this track, within the fullness of time, we will start to see the rating agencies looking at us differently. I am not going to say we should ignore it, but at the same time I think that if you look at the total picture, tourism can still continue to meet and surpass its targets in the face of what the rating agencies might be saying,” he said.
Though dissatisfied with the performance of the economy as a whole, S&P said on Wednesday that it expected Barbados’ tourism product to continue to perform well this year, after contributing to economic growth and a reduction of the deficit last year.
“Strong flows of tourists and the expansion of the Sandals hotel helped Barbados to grow two per cent in real terms during 2016, the highest rate of growth posted since 2009. This contributed to an improved economic assessment,” S&P said.
However, the international ratings agency pointed out that “historical growth has been below that of peers with a similar level of economic development.”
It also warned that growth was being held back “by recurrent tourism project delays, higher taxes, low private-sector confidence and consumption, and a significant level of red tape, which weakens Barbados’ overall economic profile”.