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STANDARD & POOR’S has lowered its long-term foreign and local currency sovereign credit ratings on Barbados to CCC+ from B-.
The rating agency also lowered its short-term foreign and local currency sovereign credit ratings to C from B.
In announcing the revision this evening, S&P said “government’s increased reliance on central bank financing of the still-high government deficit and the fall in international reserves reflect heightened challenges for policy implementation, the sustainability of the peg to the US dollar, and underpin expected weaker growth prospects in Barbados”.
S&P said its negative outlook reflected its view that “the government's ability or willingness to take timely steps to redress deficit and financing pressures and bolster international reserves will likely deteriorate further”.
The rating agency said there was the potential for a further downgrade over the next 12 months if government fails to make additional progress in lowering its high fiscal deficit or if external pressures worsen with persistent and large current account deficits.
However, the outlook could be revised to stable if government stems further slippage in its fiscal accounts. (NB)