Barbados’ six-notch jump in its creditworthiness rating yesterday has been downplayed by the Democratic Labour Party (DLP), as political leader Verla De Peiza contended that the new rating essentially puts Barbados back where it was before the Mia Mottley administration took power 18 months ago.
De Peiza told Barbados TODAY that contrary to calls for some celebration at the news, there is actually little to write home about.
It was under Mottley’s stewardship that the “country dropped five notches to default status in the first place”, she declared, noting the Prime Minister’s announcement that Barbados would defer payment on debt within days of coming to power on May 24 2018.
For several years, the nation’s sovereign debt rating lay firmly at junk status during the 2008-2018 DLP administration.
De Peiza said: “We have now moved one small step higher than where we were before the default. On the 31st of May last year, we were one step below where we are at now.
“So it is only slight progress, it is not six notches as they [Government] are saying. In fact, we would have been further along had Government not defaulted.”
The DLP leader was also critical of the length of time that it has taken Government to return the country back to its starting position.
She said: “We are definitely not out of the woods, we are still in junk bond status but the biggest takeaway for me is that we dropped five points on June 1, 2018 when this present administration decided to go the route of default and we have just come back up by six points and that has taken us 18 months.
‘This suggests to me that our 18 months could have been spent better.”
New York-based Standard & Poor’s yesterday raised Barbados’ 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.
The rating agency 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.
It was on June 6, 2018 that S&P lowered its foreign currency sovereign issuer credit ratings on Barbados to ‘SD/SD’ from ‘CCC+/C’.
This came four days after the newly elected Government announced that it would immediately suspend its external debt service payments and seek to make interest payments on its domestic debt while negotiating a restructuring agreement.
Yesterday’s news of S&P’s upgrade prompted congratulatory responses from economists and key private sector players. The common theme from experts is that the country’s vital signs are good and its chances for a full recovery to investment grade appeared likely.
But De Peiza told Barbados TODAY that Barbadians have paid an unnecessarily high social cost for any perceived gains from the global credit rating agency.
The DLP president said: “Our concern is that alongside of the economic situation, is how our people are faring through all of this.
“Just yesterday the private sector reported sluggishness, and this is because consumer confidence is still out to sea.
“We also have to consider our social fabric, which has remained a major concern for the Democratic Labour Party and the wider country.
“So we can’t just have the one yardstick, it must go much further than that.”
In her response to the new ratings, Mottley said: “I want to congratulate the Barbadian people for pulling together and making the necessary adjustments and sacrifice to put us all on the right path to sustainability.
“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.”