S&P rating stays same
Standard & Poor’s (S&P) primary analyst on the Barbados economy has hinted that the country’s key credit rating is likely to remain unchanged at BBB- with the outlook again assessed as stable.
In an exclusive interview with the WEEKEND NATION in Nassau, The Bahamas, Olga Kalinina said following a recent visit to the island and extensive discussions with Government on a number of outstanding issues, the S&P team was confident that the harsh measures imposed in the last Budget had “stabilized the economy”.
In an interview following a Caribbean Development Bank roundtable discussion at the Wyndham Nassau Resort on Caribbean medium-term economic recovery prospects, Kalinina said: “We came away with an understanding that the tripartite support is still very strong in the country. Despite the fiscal deficit that unfortunately is hard to reduce and evidenced in a still very high deficit in 2010, very positive action has been taken.”
Over the last two years, S&P has twice downgraded Barbados from BBB+ to its current rating of BBB-.
In the last Budget, Government, among other measures, increased the value added tax by 2.5 per cent, removed the tax free status of travel and entertainment allowances of workers and introduced user fees for the national drug service.
The S&P economist said the international rating agency was expected to maintain the stable outlook based on the assumption that the country would continue to reduce the fiscal deficit.
She highlighted the improved performance of the tourism sector and efforts to diversify source markets by going after more Brazilian tourists.
“Some of the new measures that the tourism sector is undertaking in terms of diversification of the tourist base will hopefully counterbalance the existing weakness of the British market.”
At the same time, the S&P official said the agency was concerned about the possibility that new risks could arise over which the country had no control.