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B’dos Credit Rating Drops

NEW YORK, Sep. 26, CMC – International credit rating agency, Standards and Poors (S&P), has lowered its long-term foreign and local currency sovereign ratings on Barbados to B- from B. The global ratings agency says the outlook for the island is negative.

In a statement on Friday, S&P said over the last several years, the government’s financial profile has been eroded “because of persistently high fiscal deficits, reflecting both budget slippage and unbudgeted spending.

“The agency noted that the central bank continues to finance the government “Which we consider at odds with its goal to defend Barbados’ long standing currency peg with the US dollars” the report added that the “deficits, coupled with current account deficits not fully financed by foreign direct investment (FDI), have increased the country’s external vulnerabilities”.

However S&P said while economic growth should pick up during the next two to three years, there is “lackluster private-sector confidence, continued delays in several tourism projects and potential spillover from Brexit” and this should keep growth moderate.

“We expect per capita GDP growth to be around 1% in the next two years, comparatively low for a country at its level of income. The country’s per capita income, projected to be almost US$16,000 in 2016, is higher than that of most of its rating peers. That said, Barbados’ economy and the sovereign credit rating benefit from a low level of perceived corruption and a generally stronger political system and institutions than most of the sovereign’s peers in the ‘B’ rating category.”

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