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The business community by now is all too aware that the ratings agency, Standard and Poor’s on August 7, lowered its issue-level ratings on Barbados’ global bonds due 2019 and 2022 to D (default) from CC. In addition, the ratings agency lowered its local currency rating from CC to Selective Default (SD).
With respect to the bonds, the ratings agency advised that owing to missed payments by the Government of Barbados, this rating was moved to Default.
The ratings agency added its selective default long and short-term local currency ratings reflected Governments “automatic” principal payment rollover of its short-term local currency treasury bills – a positon which in accordance of its own criteria represented a default.
Unfortunately, however, while expected, the ramifications of these downgrades make it increasingly difficult for businesses who rely on imports to continue their operations, as their credit worthiness and by extension their respective payment terms, in external markets are negatively impacted.
The Chamber supports the Government’s on-going discussions with stakeholders in different sectors and with external agencies, however we need to move assiduously to ensure that the right decisions are made and quickly. The Government needs to return as soon as possible to a position where it meets its obligations to creditors and service providers alike.
In closing, the BCCI recognises and has for some time held the view that the Government of Barbados has to make some difficult and possibly unpopular decisions to return the Barbados economy and its instruments to investment grade. The reality that faces the country today is that these decisions need to be made in the short term to protect the future that we all seek for Barbados. The Chamber stands shoulder to shoulder with the country to ensure that these decisions are made in the interest of all. (PR)