Barbados’ slightly improved credit rating by Moody’s Investor Services does not reflect the extended suffering of working-class Barbadians, two political parties have contended.
In separate statements, the Democratic Labor Party (DLP) and the United Progressive Party (UPP) reacted to news that the country’s economy was not operating as “poorly” as before. Moody’s on Tuesday noted the country still carried a very high credit risk, but was upgraded from Caa3 to Caa1, suggestive of a slightly increased ability to meet its obligations.
While praising last November’s domestic debt restructuring and the successful negotiation of an International Monetary Fund (IMF) loan, the country’s foreign currency bonds remained at a Caa3, reflecting the stalemate between Government and external creditors.
“We are mindful of the fact that the rating was achieved through greater suffering by the average Barbadian who was forced to take pennies in the dollar for their investments, while the tax burden of companies and high net worth individuals was drastically reduced,” DLP leader Verla De Peiza argued, referring to the significant reduction in corporation tax rolled out at the start of 2019.
“In short, the Moody’s report does not touch the lives of the man in the street in Barbados,” said De Peiza, who stressed that working-class suffering “must be abated as a matter of urgency”.
She said the report failed to properly explain the IMF and other loans, which was responsible for the apparent stability of the country’s foreign reserves.
“There is little said about the absence of growth in the economy, especially after Barbados recorded three successive years of growth on average of approximately 2 per cent in the final years of the last administration.
“The artificial inflation of our foreign reserves is bolstered by two events: a further $3Bn in borrowing in the last 12 months; and the failure to pay our obligations. There are no proposals coming from Government to address growth in the economy.
“Even for Moody’s the caveat remains regarding the failure to meet debt obligations to foreign creditors.
“Though this is a smaller portfolio, it is a worrisome feature, as it will continue to impact our standing internationally; and there seems no end in sight to the White Oak negotiations,” said De Peiza.
While noting the DLP “took note” of the improvement, the party leader criticised the continuous pain inflicted on citizens.
“Our people suffer the highest rate of petrol products in the region and a 75 per cent increase in bus fares. Pensions have been cut and child allowance discontinued, making two new vulnerable groups of persons who already have contributed to our society. The report also must be read against the background of signals coming from the IMF that Barbados may well be behind in its targets, and the suggestion that VAT be raised further,” said De Peiza.
The DLP president criticised the current administration for failing to adequately inform Barbadians about the debt-restructuring saga, which has been reported internationally.
In a separate statement released on Facebook, the UPP also linked the Moody’s upgrade to Barbados borrowing from the IMF, but argued it has been accompanied by a “back-breaking” tax burden.
The statement questioned how long the Mia Mottley administration would continue to pay the exorbitant price for numerous consultants and suggested such reckless spending would be counterproductive in the country’s fight for economic recovery.
“Those who are part of the “chosen circle” cannot feel it. It was called sharing the fatted calf in another place. Those who are still getting a hefty cheque every month might not be feeling it too much. But everyone else can.
“It is time that Barbadians begin to see real results from the alleged “brains” which they elected to Parliament and which sit in the Senate and the Cabinet…These brains were promised to be so powerful that we had to change the Constitution to get them. One year in and no brilliance to be found anywhere,” the statement concluded.