IT CAN BEST BE DESCRIBED as a tale of two views – and sharply differing ones – as it relates to the latest downgrade of Barbados by the international rating agency Standard & Poor’s.
Judging from his comments this past weekend to Democratic Labour Party faithful, Prime Minister Freundel Stuart is not outwardly worried and has his focus on growing the country’s economy.
Economist Professor Winston Moore is not so optimistic and sees the drop to a CCC+ rating as bad news that brings with it a gloomy outlook.
It is not an issue of who to believe or trust, nor even how and why we find ourselves in this predicament. It is about urgently implementing solutions to save the country from going over a financial precipice.
While the Stuart administration is not interested in borrowing on the international market – or rather, is unable to given the country’s ratings – it will of necessity have to look to the Central Bank and maybe the National Insurance Scheme for any domestic lending. But the really big concern must be what the constant downgrades mean to businesses, especially those in the financial services sector, which place a premium on good ratings.
The situation facing Barbados is such that it doesn’t matter whether you are a blind party loyalist or a fervent opponent of the Government. This assessment of our economy, from an independent outsider, should have made it abundantly clear to all, including trade unionists, that the situation is very bad.
We will now have to deal with the stark reality of trying to dig our way out of junk status to become investment grade again. Unfortunately, restoring our creditworthiness will not happen in the short term. It will only occur if the country pursues a sound economic policy, including reducing the budget deficit. Equally important will be the need for both the Prime Minister and Minister of Finance Chris Sinckler to make the right statements. They must recognise that the last thing Barbadians want at this stage is more uneasiness.
Consumers are already crying out about the constant upward movement of prices for goods and services and high taxation. This country has moved from being the envy of economies in the Caribbean to where it does not seem to get anything right. Hearing from our leaders that there are many other countries worse off than Barbados does not bring relief or a sense of comfort.
Achieving sustainable economic growth will not be an easy thing given our current plight. And we do not want to suffer the humiliation of further downgrades.
In the prevailing circumstances, it is all about trust in our political leadership to put aside false pride. Let us get the help we need, from wherever and whomever – and soon.