Buoyed by a major upgrade of Barbados’ creditworthiness yesterday, the private sector touted expectations of rising investment levels with renewed confidence in the economy.
Chairman of the Barbados Private Sector Association (BPSA) Edward Clarke told Barbados TODAY that Barbados’ creditworthiness coming out of default status was “excellent news” for the economy, investors and residents.
“Obviously the country is on the right track as you can see and this will be good news for investors. It will give us more confidence in the economy,” He said.
Clarke, who is also Co-chair of the Barbados Economic Recovery and Transformation (BERT) monitoring committee, said he was confident that the Government’s austerity programme was on target.
He said he remained hopeful that once the benchmarks under the BERT programme were achieved the island would return to investment grade.
He told Barbados TODAY: “We have a long way to go in Barbados still but obviously we are on the right track.
“We look forward to seeing Barbados back to investment grade all around, which is where the ultimate goal should be.
“Once we continue in the direction in which we are going I think we should get there.
“It is not going to be easy but we are on the right track and this is good news for the private sector and for all investors and all Barbadians.”
On Wednesday, the New York-based Standard and Poor’s (S&P) raised its long- and short-term foreign currency ratings to ‘B-/B’ from ‘SD/SD (Selective Default), and assigned its ‘B-‘ foreign currency issue rating to foreign currency debt delivered in the exchange.
This means the island’s long-term foreign currency ratings moved six notches up to the ‘highly speculative’ category, while the short-term foreign currency rating is between non-investment grade speculative and highly speculative, both up from ‘default’.
After reaching a debt swap deal with bond holders of Barbados US-dollar debt, Government exchanged over $1 billion (US$531 million) in new 2029 bonds and $64 million (US$32 million) in past due interest bonds to holders to those bond holders that have been in default since 2018, of which about $1.3 billion (US$677 million), plus accrued interest, was outstanding.
The ratings agency also pointed to the need for Government to stick to its austerity programme, stating that failure to meet fiscal and debt targets over the next year could weaken investor confidence and result in loss of capital inflows.
But S&P said it could raise the ratings over the next year should Government adhere to its fiscal targets and reform agenda, which it said could strengthen investor confidence and contribute to improved gross domestic product growth prospects.