BRIDGETOWN, Barbados (CMC) The Barbados government says it regrets the decision by the US-based rating agency, Standard and Poors (S&P) to downgrade the island to CCC+/C, based on the governments limited financing alternatives and low international reserves.
The US-based international rating agency warned that unless the Barbados government does a better job at controlling its debt and restoring foreign reserves, the islands local currency is at risk of being devalued.
In a statement, the Ministry of Finance said that the downgrade lowers the credit rating one notch, which puts their rating in line with that of Moodys.
The downgrade was expected and largely driven by the decline in our international reserves reported in the recent Central Bank Economic Report, the ministry said, adding that the decline in the reserves was largely due to legal and administrative delays in public inflows linked to various projects as has been explained before.
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Barbados at risk of Currency devaluation
We live a cyclical financial world, now Barbados facing increasing financial difficulties while Guyana on the verge of economic prosperity from recently found oil and petroleum products. Never look down on your neighbours, treat them well for one never knows how life will transpire!
In reply to Slipfeeler
Are you suggesting (or predicting) a 'reverse' bench?
wonder if the governor of the central bank lost his job because he reported bad news? trying to figure that one out.
In reply to Drapsey
Let's hope that there will no benches at any Caribbean airports. No Citizen of any Caribbean country ever complained of been benched in JA, including Guyanese, T&T, B'dos etc. In JA it's just One Love to everyone! Although JA receives almost 2 million visitors each year!
And Barbados begging T&T for money
FCB mum on US$25m loan to downgraded Barbados
Majority state-owned banking group First Citizens is refusing to disclose the terms of a loan it made to the Government of Barbados, which was first disclosed by that countrys embattled minister of finance, just days before the Caribbean country was downgraded to CCC+ from B- by the S&P rating agency.
In a statement to the Guardian on Saturday, First Citizens said: As you may appreciate, First Citizens treats all client information as private and confidential and therefore we cannot comment on the details of any transaction with our clients. With respect to the Groups country exposure to Barbados, we have two entities operating in Barbados: First Citizens Bank Barbados Limited and First Citizens Investment Services Barbados Limited. The operations of these subsidiaries constitute the majority of our exposure in that jurisdiction.
A normally reliable banking source in T&T told the Guardian that the short-term loan was for US$25 million and was to serve as bridging finance for a loan from the Development Bank of Latin America (CAF) for the restructuring of the Barbados Revenue Authority to include the islands Customs department.
Barbados Finance Minister Chris Sinckler mentioned the loan financing from First Citizens at a press conference in Barbados last Tuesday.
Speaking against the backdrop of the countrys foreign reserves declining to just over two months of import cover, Sinckler said he expected the foreign reserves of Barbados to be boosted by more than US$100 million from three sources:
Sale of Barbados National Terminal Company Limited, expected to yield over US$$50 million;
Drawdown of the first tranche of a loan from EXIM Bank of China for the Sam Lords Castle tourism project; and
Release of a First Citizens Bank bridging loan for upgrades to Customs and the Barbados Revenue Authority.
Sinckler said when Barbados received those funds, its foreign reserves would go back above three months of import cover.
First Citizens did not respond to a question from the Guardian as to whether the loan was sourced in Barbados or from Trinidad, where the bank is based, and where many customers are told on a daily basis that the bank has no more US dollars to sell over-the-counter at First Citizens branches.
The banking source opined that it is much more profitable for a local bank to lend a large block of US dollars at an interest rate of over 7 per cent per annum than to retail the foreign currency to many local customers.
The loan was announced just days before S&P on Friday downgraded the long-term foreign and local currency sovereign credit ratings of Barbados to CCC+, with a negative outlook, which it said reflected its view that the Barbados governments ability or willingness to take timely steps to redress deficit and financing pressures and bolster international reserves will likely deteriorate further.
According to the S&P downgrade notice: In our view, a weaker ability to meet its debt-servicing requirements stems from still-high fiscal deficits, limited access to private-sector funding in the local market, as well as a decline in external funding, and with it foreign exchange reserves. The rating agency considers loans to CCC+ debtors to have substantial risks.
Just last week, the First Citizens announced that its board of directors had approved the sale by the government of an additional 48,495,665 shares in the bank in a secondary offering, which was announced by Finance Minister Colm Imbert in the 2017 budget.
In 2016, First Citizens declared after-tax profit of $637.2 million, which was an increase of 1.1 per cent compared with 2015.
In reply to Prako
WTRH!!!
Yuh seh...
News seh...
Wunna alternative facting, geezer!!!...
In reply to che
How much RhiRhi worth again?
In reply to bravos
she smart she left all her money outside lil england .
why u chasing away beach boy che
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