Standard & Poor’s latest Barbados Credit Rating does not phase UWI Cave Hill Lecturer

Monday is Budget Day in Barbados, the last such animal came in May 2009 and even Opposition BLP MP for St Peter, Owen Arthur, says that new Finance Minister Chris Sinckler of the DLP is not bound to do so – in his view, Estimates is the Budget as the Budget is really fussing over the fine print of the Estimates…

If you venture across at Facebook there a number of Discussion groups who rumour that VAT may jump from 15 to 20%; I find this incredible on many levels… VAT is not an idea espoused by the DEMS when introduced in 1997 – in fact, when the late David Thompson was Opposition Leader, he stated in his view the Value Added Tax is nothing more than a clever way to devalue the Barbados dollar by 15% (This story was suppressed at CBC by the Regime of the day, but it is still on videotape)!

There were two proposed taxes the late DJH Thompson considered then dropped as quickly as he mentioned them - a tax for lottery winnings and a Cellular Tax, I think the late PM was correct in forgetting those means of drawing revenue, since those are two occasions when Bajans would be rebellious for sure!

VAT if boosted by the Dems then means there is no likelihood of Snap Elections, but further if VAT jumps to 20% then no matter when Elections are finally called, this DLP Administration will be one term for sure! How can you raise taxes and not create circumstances where Cost Of Living is compensated, one of my reular contributors – Kammie Holder – feels a way around this is to abolish Income Tax, yet also implement a Cellular Tax?

The real issue to look at is Standard & Poor’s further demotion of Barbados’ credit standing… How will this prove beneficial to our offshore partners and any future plans to increase Foreign Exchange reserves? Avinash Persaud says if Barbados hits the dreaded “Junk Bond” Status what this means from ‘an Average Joe‘ perspective is that once again like the 50’s & 60’s it will be very difficult almost impossible to lay a deposit for a Mortgage or buy an Automobile (This as buying cars is already tough, most local Insurance agencies refuse to ensure a car over a decade old, far less Third party brokerage – who can REALLY afford New car pricetags now, eh?), and this not even looking at what happens when Big Businesses here want to establish a Line Of Credit for any projects they may have in mind to attempt to entice consumers to part with money during Barbados enduring a 4th year of Recession?

Dr Robinson is from UWI's school of Management, which means he is a leading economist and not just a standard practitioner, economists can usually look at trends and make assessments yet he did not predict an audience member would ask about the junk bond matter? The only reason I didn't ask was because the participant beat me to it!

Nevertheless, one financial guru says all is not lost – during BIBA’s International Business week which was partially modified due to the State Funeral, Dr Justin Robinson proclaims that Canadians are still enchanted with the current track record of Barbados’ longstanding partnership in terms of offshore Double Taxation Treaties {CLICK ON FOLLOWING LINK FOR FULL AUDIO};-

Robinson says Barbados is LEGALLY still an Investment Grade entity, which means it’s still at the discretion of those who wish to budget accordingly.

While I am not an Economist, this seems a bit frivolous in my view as a valid rebuttal, luckily at the Panel Discussion there was another broader view of seeking other markets, this view was expounded by President of Platinum Offshore Management Services, Stephen Greaves, who expressed interest in not one but four Emerging Markets, here’s the first two and why he recommends them as potential clients for Barbados {CLICK ON FOLLOWING LINK FOR FULL AUDIO};-

The POMS President cites Australia as the first of four Emerging Markets, looking at them aplphabetically he added Brazil who Bloomberg sees a 6.5 % Growth Pattern in spite of having ties with the US Economy.

Stephen Greaves - President of Platinum Offshore Management Services

These sound strong and persuasive, but he left out an important caveat – can you spot it? Think carefully while you hear Mr Greaves’ other two picks for Double Taxation. {CLICK ON FOLLOWING LINK FOR FULL AUDIO};-

The other countries recommended were Chile – who has the most bilateral agreements with over 100 countries and also India slated for a 7.5 % Growth pattern in 2011.

Have you figured it out? If any of you wondered who will do business with Barbados if S&P gave us such a damaging assessment then consider yourself graduated – however this country is too broke to even make far less import a Mortarboard for you to wear…

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