|Top News > local|
Finance Minister calls for focus
By Nadia Brancker
“Shake off the distraction,” says Minister of Finance and Economic Affairs, Christopher Sinckler.
The news of international credit rating agency Standard & Poor’s (S&P) downgrading Barbados’ foreign currency to junk status came as a shock to many since it was expected that the island would have retained its ratings.
At the launch yesterday of the eZpay service at the Data Processing Department in Warrens, the Minister made brief comments of where Barbados stands with this further downgrade by S&P.
“This recent action by S&P is disappointing, but it is not entirely surprising for those who follow these matters intently,” the Minister said. “It is clear that such action was being contemplated for some time and would have likely occurred much earlier had the Government not intervened as it did with its fiscal consolidation programme which we introduced in 2010,” he explained.
“The reality is that if you look at what S&P said in their statement, you would have to conclude that the odds were stacked against Barbados for a long time in regards to the rating,” he further stated.
“Moreover, it is unlikely by their own admission the changes they desire to see will occur in the short term because as they put it, or as we know it, sustainable growth in Barbados’ economy is dependent on the global economy which continues to be unstable and weak. Our sustainable debt reduction is unlikely to achieve this because our fiscal problems are predominately structural in nature and can only be addressed in the medium to long term.”
He added that Barbados’ movement from a high grade to junk didn’t occur over night. “Indeed the record will show that as a country we have registered consistent downgrades over the past 15 years or just as many coming when times were good. This suggests to any fairminded observer that more than a decade of deep structural deficits, an unstructured and undiversified economy and overreliance on consumerism rather than productivity and innovation have caught up with us.”
He pointed out that when Barbados had the resources and breathing space to make significant changes with our fundamentals, we chose not to.
“What this administration has sought to do with the worst recession is protect what we have built up over the years while forging ahead with our programe of fiscal consolidation and structural reform.”
Sinckler recognised that both the IMF and the rating agencies would prefer a faster and deeper process of restructuring. However, knowing the Barbados economy and society, a slower and determined process is preferable at this time.
These agencies’ method, while supported by some Barbadians, is to make dramatic cuts in public expenditure, occasioned by the retrenchment of many, Sinckler maintained.
“We reject this approach because it will devastatingly undermine the economical stability and social fabric of Barbados,” the Minister said.
“Our mission is not to panic and get hysterical about these rating actions. The objective is to recognise it for what it is, agree where we can to make the adjustments, disagree where we must and eventually forge ahead with the Barbados programme,” he suggested.
“Let us shake off this distraction and get back to work on the restructuring job we have embarked on,” Sinckler added.