THE LOCAL ECONOMY dominated the front pages of the newspapers in a most dramatic manner this past week with disclosures of reports by two international credit rating agencies.
Moody’s jolted us out of our pre-Crop Over complacency by a downgrade of Barbados’ domestic credit rating from Baa2 to Baa3, while revising the outlook to negative.
The prognosis did not make for good reading.
That agency’s view was that Government’s debt ratios would continue to deteriorate over the next 12 to 18 months to levels no longer consistent with investment grade, given the small size and limited diversification of the economy.
Standard & Poor’s report was released the following day and appeared a little more optimistic, affirming the country’s outlook as stable, but cautioned that it would consider lowering the ratings if there were erosion of the external balance sheet related to a deterioration in the fiscal trend. This was better news and supported in some measure the position of the Government.
There has been the usual point and counterpoint about the health of the economy. We leave the political arguments to the politicians, but in pursuance of protecting the public interest, there are certain inescapable issues which must be put on the table.
Given that both agencies are concerned about the state of the economy, the public needs to know whether its present state is due, in the main, to the recession or more to the application of policies which have not mitigated the hardships therefrom; or indeed, whether those policies have aggravated the situation.
Correctly reading the problem is necessary before applying any solution!
The Government thinks that its policies are correct, but the Opposition disagrees and is pushing another perspective, even calling for the resignations of the Minister of Finance and the Governor of the Central Bank.
But unless there is clear evidence of culpability on the part of these two officials leading directly to the present position, then this call does not leave the realm of political rhetoric at this stage.
On the other hand, Professor Michael Howard’s call for the Government to lay all the information out for the public’s benefit seems an admirable suggestion, as the Government is being carried on in the name, and for the ultimate benefit, of the society at large.
We support the professor’s suggestion and commend it to the Cabinet.
What is more, the issues are too important for there to be unanswered allegations concerning the rate of growth in the economy, or the integrity of statistics on the tourism industry as they concern the classification of visitors and their inclusion in calculations of the growth of that vital sector in recent months.
Throughout our long history, this country has never defaulted on any loan, and our debt obligations have always been handled by both administrations in a manner which reflects a certain confidence that the international bond market has always had in our capacity to repay on time, every time.
Difficult economic times will occur and our graduation by the World Bank prevents us from getting loans at concessionary rates, but at this stage of our development, nothing must stand in the way of our sterling record of creditworthiness.
We therefore urge that all relevant information be placed in the public domain, as a prerequisite to appeals for a total national effort to keep this country’s high reputation for political and social stability and its high creditworthiness intact.
Every effort must continue to be made to protect our progress and to maintain as far as we can the high standard of living and social achievements of which we are so proud.
