Barbados scores external debt coup
By George Alleyne
Not only has Barbados
completed a master stroke of
restructuring its burgeoning
debt and scoring billions in
savings, but the island is now
confidently looking forward to
its first international financial
credit rating upgrade in some
10 years.
Runaway debt had been
retarding the island’s economy
making it unable to come out
of recession that began shortly
after 2008, but on assuming
office 18 months ago the
new government immediately
froze international debt payments
and commenced renegotiations
with lenders that last
month ended in an agreement
for different repayment conditions
which are more favourable
to Barbados.
By successfully moving the
past and future repayment
deadlines to dates of 2021 and
2029, and through introduction
of amortisation conditions
- spreading loan reimbursement
periods over a number of
set bi-annual dates instead of
lump sum settlements — the
current government gave itself
financial room to manoeuvre
and gained significant savings.
Additional savings were
obtained through agreement
with these international creditors
to shave interest rates,
Caribbean Life, N 42 ovember 15-21, 2019
resulting in what junior Minister
of Finance, Ryan Straughn
said will amount to $2.5 saved
over the next four years.
Having earlier settled the
domestic debt and formulated
plans to grow the economy,
and with the worldwide creditors
expected to sign off on
the debt restructuring deal by
month end, the adminstration
is confident that international
credit rating agencies will halt
the slide of some 22 downgrades
the island suffered since
2008.
Straughn said that expectation
is reasonable because of
government’s massive strides
in addressing debt and other
financial issues.
“This is part of our way of
saying, to not just financial
institutions domestically, but
certainly those internationally,
the Government of Barbados
is committed to maintaining a
level of macroeconomic stability
that will drive investor confidence,
business confidence, as
well as consumer confidence to
the kind of levels that will allow
for greater economic growth to
take place.”
“For too long the credit quality,
certainly in Barbados with
the number of downgrades,
went unanswered,” he said.
The Minister said that by
the time all external creditors
sign off on the restructuring
deal agreed to, “we anticipate,
as in the case on the domestic
side, that we will see the first
upgrade in our foreign credit
rating for some time.”
He said that the projected
upgrade, “will be a signal to
all and sundry that the trajectory
which the public finances
of Barbados were on have been
changed”.
“We have committed ourselves
to gradually improving
those circumstances, not just
for the sake of getting back to
investment grade but to ensure
that along that path … ordinary
Barbadians, ordinary citizens
across the region, will be
able to participate fully and
benefit.”
Several projects that “have
been in abeyance simply
because of the uncertainty
with respect to the stability of
the Barbados dollar” were also
expected to get moving, the
minister said.
Barbados’ economic forward
movement has won endorsement
from the International
Monetary Funds Chief of Mission
to Barbados, Bert van
Selm.
Barbados Junior Minister of Finance, Ryan Straughn.
Photo by George Alleyne
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