There comes a time in the affairs of man when he must take the bull by the tail and face the situation – W. C. Fields
The recent downgrade in the outlook of Barbados investment paper by Standards & Poors given our BBB rating continues to generate much debate in Barbados. What seems to be fuelling the debate even more is the hint that a downgrade to our investment grade maybe around the corner given the rapid rate Barbados continues to accumulate debt. Barbadians have become alarmed at the prospect of having its investment paper perched at the brink of junk rating, a status most unfamiliar to Barbadians through the years. The fallout from attracting low credit rating by the credit rating agencies is the high cost to borrow if Barbados needs to float bonds in the capital markets.
Isn’t it ironic the current financial crisis which precipitated the global recession and led developing countries like Barbados to go enter an economic tailspin would have to suffer the penalty of credit rating downgrades by agencies which played a part to begin with? BU rejects the explanation by Professor Dr. Avinash Persaud that the credit rating agencies failed when rating structured products and not country ratings. How can one excuse the model for one area of their business over the next?
The current debate from the academics has tossed out some interesting takeaways for John Citizen. In one corner we have the world renown Barbadian Professor Dr. Avinash Persaud who believes the imminent downgrade of Barbados investment paper to junk status will be disastrous and must be avoided at all cost. In the other corner we have the homegrown Senior Fellow at UWI Sir Arthur Lewis Institute Dr. Don Marshall who believes Barbados should seize the opportunity to find creative ways to reduce government spending and enable the environment to encourage entrepreneurial projects to lead growth by expanding exports. He has been very bold by suggesting the Barbados Defence Force should be bastardized to support the police recruitment drive to benefit from opportunity cost savings.
BU is on the side of Dr. Don Marshall. Interestingly we are about to celebrate our 43 year of independence and Dr. Marshall has been strident in advocating the dismantlement of the Barrow (Father of Independence) model which has served us well. The billions of dollars which Barbados has invested in our people in the post-independence period now has to spew forth results. It is crunch time! In makes no sense boasting of how Barbados has used education to enfranchise its people but we continue to build out an economy based on mendicancy i.e. tourism and foreign direct investment
It seems the opposition party remains fixed on sucking political mileage from the defensive economic position the government finds itself. The political polarization in Barbados makes it mandatory that both political parties demonstrate leadership to bring the country together now more than ever to generate ideas. What better time than in the month of November to do it.
The blogmaster invites you to join the discussion.