No quick fix
ECONOMIC DECLINE OF one per cent so far this year, global financial troubles, and the slow pace of getting major private sector projects off the ground may further delay a return to growth in Barbados.
“The situation remains difficult,” Olga Kalinina, a senior Standard & Poor’s analyst, said in an interview with the SATURDAY SUN in New York.
“There are some slippages that we did not expect,” she said.
“The timing of the rebound will be slower than we initially estimated. Once again, it’s a reflection of some projects taking longer and some of it obviously is the world situation taking much longer.”
Kalinina added: “We do see there is a continuing effort to contain the spending, especially on transfers and on the subsidy side.
“We see revenue underperformance is more severe than we expected it to be, so the results of the first half of the year are somewhat disappointing.”
Kalinina continued: “Basically, we are maintaining the negative outlook as of now and we will be reviewing the credit [rating] shortly, taking into account the recent news on the fiscal performance, what’s happening with the banking sectors, what’s happening with the economy in terms of future projects and the way we see those projects and the performance of tourism kicking in to support economic growth, and how soon may be the rebound.”
But not everything was negative. The senior economist said that Barbados’ success in placing a US$200 million bond issue was a positive step because it would give the foreign reserves a welcome shot in the arm.
Kalinina noted a recent statement by the International Monetary Fund, indicating a need for action on the fiscal deficit as an accurate assessment of “the state of things on the island”.
While it was a negative review, it was “factual”, she said.
Kalinina wasn’t fully convinced that Barbados would see a return to positive economic growth by next year, as some analysts had forecast.
“Hopefully, maybe. We don’t have an exact timing for a review of the rating but we are looking at Barbados every single day.”