Domestic debt strategy working, says Straughn

Local currency upgrade by regional ratings agency the Caribbean Information and Credit Rating Services Limited (CariCRIS), earlier this week, has come as no surprise to Mia Mottley administration, who see it as further validation of the eight-month-old Government’s domestic debt strategy.

This is view of Minister in the Ministry of Finance, Ryan Straughn, who suggested this afternoon that these indications of resurgence were anticipated under the Barbados Economic Recovery and Transformation (BERT) programme.

“Obviously after having completed the domestic debt restructuring, we anticipated that Government’s credit worthiness would improve. You would have heard the Prime Minister speak to how we are going to treat to the arrears that have been built up by the last administration and we are working that through. Therefore, Government’s credit worthiness whether it is on actual debt that was issued officially or with respect to paying suppliers of goods and services, would go up,” said Straughn.

The minister’s comments also came as he prepared to travel to the United States capital for discussions on the other aspect of the restructuring which relates to the foreign debt.

Acknowleding this afternoon that Barbados was not yet out of the financial doldrums, Straughn disclosed: “I am travelling to Washington next week to focus on that and hopefully after those meetings we would be in a position to
have that matter resolved as soon as possible.

“That was the first debt that we suspended, and we are mindful that we need to get it resolved so that the country can move on with respect to that,” said Straughn, who expressed confidence that creditors would continue to be patient.

He argued that the recent rating upgrade would help to increase investor confidence in Barbados, noting that greater displays of confidence in the country’s economy are still to come.

“The rating certainly helps with confidence and helps the market to realize that it is not business as it was before. We have implemented the things that are going to make people’s engagement with Government make sense from a business perspective. I think that once we continue to do this and resolve those arrears, it would mean that that business and investor confidence is going to improve even more. This would embolden people to start to make decisions about growing their businesses as opposed to just maintaining their current situation,” said the minister.

Earlier this week, CariCRIS issued a rating of “CariBB” with a stable outlook, up from “CariD” on its regional scale local currency rating of the Government of Barbados. Pointing to Government’s targets under the four-year IMF arrangement reached last October, which include a cut in government spending and a comprehensive reform of state-owned enterprises, CariCRIS acknowledged that Government had embarked on several initiatives to help grow the economy and improve business facilitation.

The regional rating agency’s assessment came just two months after the New York-based Standard & Poor’s (S&P) raised its long and short-term local currency sovereign credit ratings on Barbados to ‘B-/B’ from ‘SD/SD’ (Selective Default). The same time S&P assigned its ‘B-’ issue-level rating to Barbados’ long-term debt issued on its debt exchange and affirmed its ‘SD/SD’ long- and short-term foreign currency credit ratings on the island, and its ‘D’ rating on Barbados’ foreign-currency issues.