At the height of the season of goodwill and cheer, Barbados certainly got some early Christmas gifts to boost its confidence and entice potential investors.
After suffering about two dozen credit downgrades from various entities in the last ten years, Barbados stepped out of default territory as international rating agency Standard and Poor’s (S&P) lifted the island’s foreign currency ratings by six notches.
S&P raised its long-and short-term foreign currency ratings to ‘B-/B’ from ‘SD/SD’ and assigned its ‘B-’ foreign currency issue rating to foreign currency debt delivered in the exchange.
S&P also affirmed its ‘B-/B’ long- and short-term local currency sovereign credit ratings and ‘B-’ issue-level rating on Barbados’ long-term local currency debt.
The island’s good fortune has largely been attributed to Government finally sealing the deal on its $1 billion-plus external debt restructuring exercise, which had most of us nervous for a while after we got over the shock that the Mia Mottley administration opted to default on its debt shortly after taking the reins of Government in 2018.
Under the arrangement, Government has exchanged $1 billion in new 2029 bonds and $64 million in past-due interest bonds to holders of its US dollars bonds that have been in default since 2018.
We have taken note of Government’s elation at this notable credit rating upgrade.
The Government’s senior economic adviser Dr Kevin Greenidge said it was a signal achievement for the island and a strong endorsement of the Barbados Economic Recovery and Transformation (BERT) programme, which will yield dividends for the still-recovering economy.
He said: “In general, the upgrade of such a large magnitude is an indication to the world that Barbados is back. It serves to further reduce uncertainty and improve prospects for investment, which augurs well for growth.”
From Nairobi on her African tour, Prime Minister Mia Mottley offered an appropriately tame response, praising Barbadians for their sacrifice while making it clear there is still much work ahead.
She said: “We are not yet where we need to be but if we stay the course and if we focus on adding value in all that we do and on growth, I have every confidence we will make it and reverse the impact of the lost decade.
“We can return the country to investment grade and continue to build people’s confidence in all that we are doing.”
An independent voice, the noted economist, Jeremy Stephen, and Chairman of the Private Sector Association Edward Clarke both suggested it was a development that investors would welcome and hopefully capitalize on.
Indeed, it would be disingenuous not to feel a measure of hope and expectation that our economy, which has been gasping for breath especially over the last ten years, is showing some signs of revival.
Still, we should resist the urge to pop the champagne corks.
No doubt the economy has made some strides in recent months. Our domestic debt is lower, public finances and international reserves have certainly improved.
But Barbados is more than just an economy. The fact is most Barbadians hardly understand or see the relevance of upgrades by rating agencies, important as they are.
Most of us who have been called on to make sacrifices under the BERT programme is focused on making ends meet. Most Barbadians are still anxious for better bus services, reliable and consistent garbage collection, access to affordable health care, lower food prices, and overall improvements in the standard of living.
We are still eager to see promised tourism investment and the resulting jobs and economic activity that will stimulate.
Government has long declared its goal to revive the Barbadian economy and build a more equitable society that is thriving economically and offering citizens a meaningful quality of life.
What is needed now more than ever is a clear, unambiguous roadmap to growth.
The lost decade won’t be over until we have passed some more milestones of the kind that Barbadians can actually feel they themselves are on the road back to prosperity.