Don't expect any radical moves in Barbados' economic management if voters change the Government.

For despite the expected rhetoric on the political campaign trail in the next election season, a change of government is unlikely to result in any major deviation in economic policy.

The reason: both the ruling Barbados Labour Party led by Prime Minister Owen Arthur, and the Opposition Democratic Labour Party led by David Thompson, who was once the Minister of Finance, are virtual ideological twins, especially when it comes to economic policy.

That's the message, which one of Wall Street's most highly respected credit rating firms, Moody's Investment Service, a global credit research company, is sending to investors in the world's major financial markets.

The bottom line, according to Moody's, is that the Bees and the Dems see eye-to-eye on key economic and social issues.

"There are little major ideological differences between the two, particularly in matters of economic policy, although the DLP has closer ties with the labour unions," Moody's explained in a recent assessment of the nation's political and social development.

"Moody's does not expect a meaningful shift in economic policies in the event of a change in leadership," added the firm, whose name, like that of Standard & Poor's, is a household.

Interestingly, Moody's described the two parties as being centrists, but with BLP "centre-right" on the political scale and the DLP "centre-left."

A prominent Barbadian analyst in North America who requested anonymity, endorsed that assessment. He said Moody's was stating a political fact of life and it "underlined a key factor in Barbados' history of political and economic stability: the ideological affinity of both parties".

In their review of economic and social conditions in Barbados, a team of economists led by Alessandra Alecci gave the island exceedingly high marks for political stability, which it traced to its historic "tradition of parliamentary practices" in the region and the fact that for centuries local representatives were very active in electoral politics in the House of Assembly, which "was also in charge of financial matters" in the country.

"This tradition laid the foundation for political stability and the building of national consensus on economic and social policies after independence in 1966," Moody's stated.

Economic growth

With an election due sometime between now and September next year, according to the ratings firm, and with the country on course to register continued economic growth in the next couple of years while having to deal with an "uncertain fiscal outlook in the medium term" and a number of "longer-term challenges," Moody's painted a picture of Barbados as a relatively successful and prosperous place.

On the economic front, a mix of "favourable global conditions and (local) policy initiatives led to a modest reduction of key imbalances in 2006 without compromising the pace of economic growth," it stated.

With unemployment falling below eight per cent but with inflation running higher than usual between six and seven per cent, Moody's gave the tripartite accord between Government, trade unions and the private sector a highly favourable report card for its positive impact on people's lives and the country's political and economic stability.

And that protocol, argued Moody's, was an example of how Barbadians and their political parties were able to reach consensus on economic and social issues.

Describing it as a "distinctive feature of Barbados' political framework", Moody's credited the tripartite arrangement with being "particularly instrumental" in resolving serious problems during the balance of payments crisis of 1991-92. It "helped implement tough measures that staved off default and devaluation", the credit rating firm declared.

But the benefits didn't stop there.

The mechanism of consultation and co-operation in the formulation of economic policies, including the setting of wages, has helped Barbados to protect and improve its already "high standard of living while preserving the 2:1 parity of the Barbados currency with the United States dollar", Moody's stated.

But it took a swipe at the Arthur Administration, criticising it for its "erratic" fiscal policy and "slow" efforts at fiscal consolidation in the period after the 2001 to 2002 downturn.

Back then, to counter the effects of 9/11, the government adopted counter-cyclical policies to offset the adverse fall-out from the terrorist attack on the United States.

"Increased expenditures led to a large nominal deficits at the central government level: 3.5 per cent and 6.4 per cent of GDP (gross domestic product, respectively in 2001 and 2002, compared to a 1.2 per cent average during the previous four years.

"In addition, there were substantial off-budget expenditures for different capital projects" that amounted to almost six per cent of GDP in 2002 alone.