by Anesta Henry
Prime Minister Mia Mottley has welcomed the recent upgrade from international rating agency Standard & Poor’s as “great news”, saying it was an indication that Barbados was on its way back.
However, the Prime Minister whose Barbados Labour Party (BLP) administration has been implementing tough measures to stabilize the ailing economy cautioned that the news does not “allow us to rest on our laurels, because the country is not where it wants to be.”
On Friday, Standard & Poor’s raised its long and short-term local currency sovereign credit ratings on Barbados to B’-/B’ from ‘SD/SD’ (selective default), one of the first positive ratings after suffering more than 20 downgrades from different agencies over the last decade.
The New York-based experts said the upgrade was based on the Government’s successful completion of its local currency exchange, the implementation of the Barbados Economic Recovery Plan (BERT) and the recent financing received from multinational lending institutions, including the International Monetary Fund and the Inter American Development Bank.
The Prime Minister commented on the development this afternoon at Government Headquarters, Bay Street, St Michael where she signed the Inter-American Development Bank (IDB) Special Development Lending (SDL) loan agreement with the Bank’s President Luis Alberto Moreno. Barbados is the first country to access this new SDL facility since created by IDB.
“The news that came this weekend from Standard & Poor’s that we have in fact seen our domestic debt not just upgraded, but upgraded four notches with respect to our long term debt, and with our short term debt, three notches. And with a very clear signal, that once we complete the discussions on the restructuring of our foreign debt, you are likely to see further upgrades.”
Mottley added that from a psychological standpoint, the development was important to the country which had regrettably become accustomed to downgrades, with as much as 24 recorded over the last decade.
“And that psychologically did a lot to batter us, but worst than that, it caused interest rates to rise, the cost of borrowing to significantly rise, and perhaps even worst than all of that, it triggered the movement of certain companies offshore because a corporate entity could not get a credit rating higher than a sovereign credit rating. And we all know the story of Sagicor, which had to move to Bermuda, in spite of the fact that Sagicor’s genesis was in Barbados in the 19th century. That perhaps, was the hardest blow in the last decade, for us to take,” she said.
The Prime Minister was however quick to point out that while Barbados had not yet arrived at where her Government wants it to be, work was ongoing to keep the island on the right track.
Mottley further stressed that Barbados must again shoot for the stars as it was accustomed to doing. (AH)