Two opposition political parties, including the predecessor in Government, are cautioning Barbadians against breaking out the champagne to toast the first credit rating upgrade in ten years.
Solutions Barbados and the Democratic Labour Party (DLP) are both contending that the upgrade, which comes after the country suffered a decade of two dozen downgrades from international ratings agencies, is no real indicator that Government’s Barbados Economic Recovery Transformation (BERT) is working.
On Friday, international rating agency Standard & Poor’s (S&P) raised its long and short-term local currency ratings for Barbados from selective default (SD/SD) to B-/B. The rating agency also assigned a B- local currency issue rating on the domestic debt issued in the recent debt exchange.
S&P attributed this new upgrade to the fact Government completed its local currency debt exchange, initiated an economic recovery plan, and received approval from multilateral lending institutions for new sources of financing.
The agency said it was “raising our transfer and convertibility (T&C) assessment on Barbados to B- from CC, adding “the stable local currency outlook balances our view of the Government’s commitment to a fiscal and structural adjustment with the economic and political challenges of doing so”.
Leader of Solutions Barbados, Grenville Phillips II, told Barbados TODAY that the upgrade came at too great a cost to Barbadians and should be a source of shame for the governing Barbados Labour Party (BLP).
“We did get the upgrade on the local debt but not on the foreign debt. The local debt was expected because the BLP through BERT confiscated part of our pensions and retirement savings and then change the law to make sure that … that confiscation was legal,” said Phillips,
He was referring to the decision to swap Government’s six billion-dollar debt for new instruments which reduces the return for creditors and stretches out the repayment period.
“We’ve got an upgrade but at what cost? This is not the way it should be done, it should be that you grow in the economy and therefore you are rewarded with the upgrade not that you have decided to confiscate person’s money and then rejoice in the upgrade. There should be no rejoicing in this upgrade given the way that it was done,” he said. “Government should hang its head in shame.”
DLP president Verla Depeiza, whose party presided over the ten years of continuous downgrades, was also skeptical of the BLP’s six-month achievement. She noted that while the upgrade was welcomed, it was still too early to say that Barbados was beginning to turn the corner.
“It is much too early to say; it is not as if we had an upgrade in everything and it is surely not an upgrade in our foreign exchange position. So, I really can’t say what it is but any movement upwards is always welcomed,” said Depeiza, who promised to comment further after analyzing the report with her political team.