Barbados’s annual fiscal deficits continue to widen, Standard & Poor’s maintain rating at verge of Junk: Bajan reaction – Central Bank’s hero is now Bobby McFerrin?

The Wall Street Journal had some news which may surprise few Bajans and will be interesting to see Her Majesty’s Loyal Opposition‘s reaction tomorrow, bearing in mind Owen Arthur and his stormy relationship with Winston Cox who showed far more integrity than many of his colleagues…

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Here’s what one of the more respected fiscal watchdogs of the world had to say about Bridgetown;-

S&P still rates Barbados at triple-B-minus, on the verge of junk territory. The negative outlook reflects increasing credit risks driven by a weakening external financial and economic environment.

Barbados’s government has introduced several measures to grow revenue and taken other steps to contain spending, an effort that has improved its fiscal performance in the first six months of the current fiscal year. But high unemployment, relatively high inflation and weak growth prospects continue to pressure the government to spend.

Despite some recent improvements, the deficits are projected to continue to be large,” analyst Olga Kalinina said.

S&P projects the country’s general government debt will average 3.7% of gross domestic product on average between 2011 and 2014, while interest costs eat away 13% of general government revenue.

A fixed exchange-rate regime puts a heavier onus on fiscal policies, leaving the government less room to maneuver on a macroeconomic level…

Meanwhile one learns of the official reaction from the Tom Adams Financial Center, apart from realising that the DEM’s have no wish to admit there’s a hole in the bucket and therefore the Central Bank must answer their piper and dance accordingly (Really now, so how can one they set up for General Elections then? Too many independent thinkers like what Goebbels objected to…), one has to wonder if they channelled Bobby McFerrin a little TOO much?

On 18 November 2011, Standard & Poor’s Ratings Services (S&P) affirmed its BBB-/A-3 local and foreign-currency sovereign credit ratings on Barbados. However, the outlook has been revised to negative from stable.

The essential message of the S&P Press Release is the vital importance of achieving the fiscal targets of the Government’s revised Medium Term Fiscal Strategy (MTFS). The economic outlook has worsened, because of the weakened performance of the industrial countries.

That means lower expectations of foreign exchange inflows for Barbados in the immediate future, even though targeted investments should lift foreign earnings down the road. Barbados has a high propensity to import; therefore, Government’s expenditure must be further contained, to conserve foreign exchange.

The S&P report concludes that the outlook for Barbados may stabilise, provided that Government achieves its fiscal consolidation targets.

Oh goody, it’s not our fault (Is it ever?) – so that’s why Chris Sinckler said not so long that 1% growth for 4 months is SUPERB!! Listen, the Government needs to stop looking at favouring those who perform what amounts to verbal & political fellatio or cunnilingus giving jobs to sycophants and start considering who has Barbados’s real interests at heart, not only employ them but empower them and let them make the needed changes to get us out of this entropic vortex before Barbados disappears as not some country’s subsidiary, but a soulless corporate satellite.

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