…Dialysis patients have their lives put in jeopardy by the absence of three critical drugs at the QEH…
As Barbadians struggle to survive the permanent hot mess by the DLP, the Moody’s review, the Auditor General’s Report, yet another tax, the iniquitous so-called Municipal Tax, unanswered questions about the Cahill deal, along with diverse other unanswered charges from the business community and citizens opened new sores on the disease riddled Government.
First in the week that was, the characterisation by the DLP of Mia Mottley as power hungry and the BLP as preachers of doom was stripped bare and revealed as the nonsense it is by the latest Moody’s report, confirming the truthfulness of everything that the BLP and the several objective commentators are pointing out. Moody’s managed to do what no one has so far managed – galvanize a country numbed by six years of economic, social and personal bleeding with new fears.
If Barbadians were not scared to death by the taxes, brutal sending home of people, Gestapo-like treatment of civil servants in the rush to establish the Revenue Collection Agency, they certainly took note of the full frontal condemnation of every aspect of the DLP’s resuscitation programme as taking effect as much as a tortoise in a 100 metre race with Usain Bolt.
Former Prime Minister Sir Lloyd Sandiford led restructuring in the early 90s
For, on Tuesday, 17 July, 2012, Standard and Poor’s – one of the three major international credit rating agencies – downgraded the Barbados Government’s financial credit rating. The Government’s foreign currency bonds status has reached junk status – from BBB-/A-3, to BB+/B, in the S&P’S rankings.
But, the PDC is not surprised that this has come about. As that, ever since the Barbados government’s last effective downgrade by Moody’s (another of the three major international credit rating agencies) in 2011, we would have been forewarning many people many times on here – on BU – and in other fora – that the Government of Barbados international creditworthiness would have been deteriorating at such a fast rate, that it was only a matter of time before it was going to be downgraded again by anyone of these credit rating agencies.
Well, that is what just happened on Tuesday – a day when, too, the Nation Newspaper was reporting big and bold on its front page, how the main public sector union – the NUPW – was bombastically ungraciously pressing for a 10% wages hike for public workers.
Annie Lowrey,A Harvard grad who is an economic policy reporter for the New York Times’ Economix blog – Credit:: Policymic
…what percentage of investors who invest in Bim are driven by ratings? what rates can we raise money at if we need to? The fact is that Jamaica with a much lower rating has been raising money globally at comparable rates to Barbados, actually lower in some cases.
My general point is that all the people who have been opining have not bothered to check or try to get info on the trading in currently outstanding Barbados government bonds graded internationally. has there been any selling off, have the yields gone up. How can we claim to be serious about these issues?…
Of concern to BU and others we know is the lack of financial Reporters employed by traditional media. One only had to observe the Central Bank of Barbados press conference yesterday. The traditional media whether it wants to accept the responsibility is an opinion shaper for many Barbadians.
The current DLP keeps telling Bajans that things are “OK and NOT that bad in Barbados”, however below is the overall summary of the DLP produced 2012-2013 Barbados Estimates. The DLP has given Bajans (5) straight years of a major account deficits due to poor fiscal alignment, budgeting coupled with ZERO fiscal vision for Barbados.
Estimated Current Barbados Revenue – $2,656,139,783
Estimated Total Barbados Expenditure – $3,645,859,147
Estimated Excess of Total Expenditure over Current Revenue $989,719,364
Capital Expenditure at January 31, 2012 increased by 6.2% over capital expenditure for the same period in fiscal year 2010-2011
(excerpt from DLP produced 2012-2013 Barbados Estimates)
Now you tell me BU does the 2012-2013 Barbados Estimates summary above give you the “warm fuzzy” that things are OK in Barbados, keeping the PM in mind and the possibility of giving the DLP another term?
Next week bears an awful foreboding for Barbadians from all walks of life and all sectors contributing to the national economy. There is further predictable gloom on the economic horizon; this fact is based upon two significant things. For starters, the global economy remains as volatile and uncertain as it has been since 2007; the UK, USA, and Europe as whole are fighting stubbornly to bring about some stability in the context that their economies are still courting a double-dip recession, unable to kick-start employment, and are battling a series of corruption and other forms infelicitous charges regarding the public purse.
The second factor speaks to the lack or insufficiency of innovative economic mechanisms by government to deal with the shocks and turbulence impacting on Barbados given its peculiarities of a very low manufacturing base, a weak export climate, a restricted services economy, a fixed exchange rate regime, and an ever increasing import bill that far surpasses the capacity of the country’s production and consumption. Together these things make the job of Minister of Finance a perplexing one especially considering his ‘greenness’ to the profession notwithstanding his enthusiasm and/or other attributes.
From recent memory, perhaps the only Barbadian that I may say who would cherish and not envy the current Minister’s position is the Leader of the Opposition despite his acknowledgement of the tremendous task and acumen that is necessarily required for a return of Barbados to relative economic success. In my opinion, even with Mr. Arthur the difficulties would not disappear despite he may offer some confidence in the economy and inspire the local private sector based upon his track record. This is likely to be the case since in all fairness to potential leaders and economists, very few if any public statements made in the past year have suggested new economic paths for the country. Yet there is little dispute about the country’s economic accomplishments under his leadership.
Financial and academic economists are rushing out oaf the woodwork to take sides in the continuing debate about the state of the Barbados economy, the competence of the government, and its ratings by the international rating agencies. What is clear, however, is that the people who matter – the taxpayers – are not getting a true picture of the state of the economy.
Two of those who have taken opposing views on the Moody’s downgrade are Professors Michael Howard, broadly in agreement, and Avinash Persaud, who is opposed. If Professor Persaud’s outburst, as reported on Barbados Today Online (15/6/11) is accurate, he is simply wrong in suggesting that the Moody’s downgrade was ‘an irresponsible rush to judgement.’ Where is the evidence?
What should they have waited for, more soothing words from the minister of finance and his backers, asking citizens to accept in good faith that the economy is in good shape, but not providing any sound evidence to back it up. Professor Persaud, a member of the prestigious National Council of Economic Advisors, is either speaking as an objective economist or as an economic advisor to the government, an insider. He has to make clear his position. He is reported as saying: “I have no doubt that Barbados will repay its debts and so I believe the decision of Moody’s is an irresponsible rush to judgement, especially given the recent decision of Standards & Poor’s to hold our credit rating steady.” Where is the beef? If Moody’s is rushing to judgement, then where is the counter evidence, the facts to substantiate Professor Persaud’s apparent position that Barbados would repay its debts? Does he know something that the rest of us do not?
Press statement from an official at the Ministry of Finance
Chris Sinckler, Minister of Finance
The recent decision by Moody’s to adjust Barbados’ domestic Credit rating downward coming as it is just weeks after Standard and Poors using the same information issued a review holding the country’s rating, is both disappointing and surprising.
Disappointing from the perspective that while it recognises the country’s efforts at fiscal consolidation as evidence by the initiatives taken as late as the last budget and more recently in the expenditure restraints in the 2011-12 estimates, it does not sufficiently credit these efforts in the government’s quest to reduce its fiscal deficit and ease debt burden over the medium to long term.
Equally, it is surprising because while correctly holding the foreign debt rating, it curiously ignores the very strong and liquid domestic capital market situation to claim that the system might be unable to support government’s requirements over the short to medium term.