Negative outlook

Barbados has received another downgrade from Moody’s Investors Service.
On Friday, the ratings agency downgraded the Government bond rating from Ba1 to Ba3, citing poor economic growth and rising fiscal deficit.
Moody’s also pointed to the growing costs of funding and the increasing reliance on short-term funding, citing the country’s “continued anaemic economic performance”; ongoing deterioration in the Government’s financial strength due to persistently large fiscal deficits and rising debt levels; the deterioration in the Government’s debt profile as a result of the significant increase in domestic short-term borrowings over the past two years; and the fall in foreign exchange reserves by more than 30 per cent during January-September to $505 million for its two-notch downgrade.
Moody’s also said the country’s credit outlook remained negative. “The continued negative outlook on Barbados’s rating primarily incorporates Moody’s expectation that the Government’s debt metrics are likely to continue to deteriorate. Additional factors driving the negative outlook are the rating agency’s expectation that Barbados’ growth prospects will likely remain subdued; the recently announced fiscal consolidation plan is unlikely  to reverse current trends in Government debt indicators; the Government is likely to face increasing financing costs; and  pressure on the exchange rate peg will continue to increase,”  it said in a statement. (PR)