THE RECENT announcement about Standard & Poor’s downgrading of the credit rating of the Caribbean Development Bank (CDB) must be a matter of concern for the borrowing and funding members of the regional institution.
Like the much older University of the West Indies, the CDB has emerged over its 42 years of operations as a major pillar in the service of regional economic integration and functional cooperation.
A visionary project of the founding fathers of the Caribbean Community (CARICOM), and reputedly associated with the thinking of the iconic
Sir Arthur Lewis, its first president, the CDB originally secured its enviable AAA credit rating in 1992 during the presidency of Sir Neville Nicholls.
That rating, first earned from the United States-based Moody’s Investment Services and subsequently also extended by Standard & Poor’s, was to prove helpful in the CDB’s effort under the presidency of Dr Compton Bourne to raise an estimated US$100 million on the international monetary market for financing the operations of the Caribbean Court of Justice which was inaugurated in 2005.
Some governments of the borrowing member-countries have at times found it necessary to express criticisms over management practices that affected expeditious disbursements of funds for approved projects.
Generally, however, the CDB has enjoyed the confidence and support from all of the borrowing countries and commendation from its regional and international donor members for the critical roles it continues to fulfill in the social and economic development of the Caribbean.
Dr Warren Smith, who has been heading the CDB for a year now after serving in other capacities, took the comparatively minor adjustment to the institution’s long-sustained AAA credit rating to now AA1 in good stride.
He has noted that the development was not exactly a surprise in the context of “today’s heightened (global) environment of uncertainty. . . .” The president also conceded that there may indeed be need for some improvement in the bank’s “risk management practices”.
Whatever the nature of such “risk practices”, Dr Smith well knows that while the international credit rating agencies maintain their monitoring exercises – even as others continue to question the criteria they apply – the CDB’s Board of Governors, comprising regional and international representation, would also be vigilant as they look forward to restoration of the prized triple AAA rating.
