Barbados credit rating upgrade set to ‘bolster economy, ease public spending’

Barbados’ credit rating upgrade by Moody’s is expected to lower government borrowing costs, boost investor confidence and pave the way for increased public investment, according to economist Professor Justin Robinson.

Reacting to Moody’s decision to upgrade Barbados’ long-term issuer and senior unsecured ratings from B3 to B2 with a stable outlook, the UWI finance expert said the development reflects growing international confidence in the country’s economic direction and reform agenda.

“For the average Barbadian, a stronger credit rating translates into indirect but important benefits,” Professor Robinson told Barbados TODAY.

“It eases the pressure on public finances, freeing up more money for public services like health, education, infrastructure and social support.”

The professor of finance, who is principal of The University of the West Indies Five Islands Campus in Antigua, added that the improved rating is also expected to support job creation in key sectors such as construction, tourism and business services, while helping to maintain price stability and protect household spending power.

In a release announcing the upgrade, Minister in the Ministry of Finance Ryan Straughn described it as a “positive affirmation” of the government’s fiscal discipline under the Barbados Economic Recovery and Transformation (BERT) programme.

Launched in 2018, the programme was designed to stabilise public finances, reduce debt and lay the foundation for sustainable economic growth following a period of fiscal crisis.

“This shows that Barbados is on the right path,” Straughn said, noting that consistent primary surpluses and reduced debt levels have played a critical role in stabilising the economy.

He further noted that increased investment, particularly in housing, is already evident, along with lower interest rates and signs of job growth.

The minister also pointed to new investor interest in long-term government bonds as a sign of confidence in the local financial market.

With Barbados’ creditworthiness improving, Professor Robinson said the country is now in a stronger position to attract international financing on better terms, fund infrastructure and climate resilience projects, and diversify its economy beyond tourism.

“It also gives us greater stability in policymaking and reduces the risk of abrupt fiscal adjustments that could affect everyday life,” he added.

Professor Robinson further acknowledged that although not all daily concerns are affected by a credit rating upgrade, the move helps lay the groundwork for more predictable and sustainable national planning. (SM)