In the face of bad news, a politician in Government must interpret it with a rationale he hopes would ease the expected anxiety of the public.
An Opposition politician, however, would see the same news as a golden opportunity to undermine the public’s confidence in the Government.
The problem with this age old approach to complicated matters such as the economy is that the majority of the public often don’t get a chance to fully grasp the real issues at stake. Instead, they are heavily influenced by the propaganda of either the Government or Opposition, and who they believe often comes down to which of them they trust.
Because each party here knows this, they are busier than ever trying to get their message out. That’s why increasingly letters to the newspapers, callers to the radio call-in programmes and the bloggers/email letter writers supporting both the Government and Opposition, keep bombarding us with their view points.
Their job, first and foremost, is to effectively win friends and influence people. The tragedy of this approach though is that the truth is always the first casualty.
This is precisely what happened last week when the reports on the economy by the rating agencies Moody’s Investment Services and Standard & Poor’s (S&P) were revealed.
Moody’s report came to light first last Tuesday. It downgraded Barbados’ domestic currency rating from Baa2 to Baa3, a notch above junk bond status, and revised the country’s outlook to negative.
Moody’s was concerned about the capacity of the local market to absorb the increased levels of Government debt growing through issuances, while at the same time the country is carrying a large current account deficit that is expected to rise given the relentless increases in oil prices.
To this obviously bad news, Minister of Finance Chris Sinckler called the downgrade “speculative and [an] unnecessary rush to judgement”. He said he was both surprised and disappointed at Moody’s decision, and stressed that Government remained focused and committed to “working our way out of this tough recessionary period”.
Conversely, Leader of the Opposition Owen Arthur said Government’s policies were ill-advised and not getting the job done. He said that someone should be held accountable for this “mess”, and called for the firing of both Sinckler and the Central Bank Governor, Dr Delisle Worrell.
The following day, S&P in its report said it would maintain the island’s BBB-investment grade rating and placing the economic outlook at “stable” since the “economy has bottomed out and that economic activity is now accelerating”.
The agency stated it would upgrade Barbados’ rating if the country’s economic prospects strengthened in a sustained way, or if fiscal accounts showed structural improvement.
If the situation deteriorates, however, it warned that a downgrade was likely to follow.
Sinckler said he could not reconcile the contradicting reports from the two credit rating agencies, but added “we accepted that we would have problems with debt as the country battled these tough times . . . but we are on a trajectory to achieve growth.”
He then said all “the loose talk about junk status” was “unnecessarily inflamatory”.
Former Opposition leader Mia Mottley in her response to the S&P report said Sinckler was using it as a “political shield” even though S&P still had clear concerns about the Barbados economy.
This is what I mean about the blurred messages. Two reports, similar facts though varied outlooks, but two vastly different political interpretations.
In all of this posturing though, what is the truth in this matter? Has there been growth in the economy and is it improving, or not getting any better? Is Moody’s outlook more realistic for us given the current world situation, or is S&P’s? And based on all that is being said, what implications does this have for the future of the each Barbadian?
Thankfully, in the SUNDAY SUN some clarity on these reports was provided by Sir Courtney Blackman, Barbados’ first Central Bank Governor, and Charlie Skeete, a former senior economic adviser at the Inter-American Development Bank.
They said the two rating agencies credit actions on Barbados may differ, but the economic message was the same – the country must urgently address its serious fiscal problems.
