Thursday 6 August, 2020

Dr. Greenidge: Credit rating upgrade shows BERT is working

Barbados’ recent credit upgrade by Standard and Poor’s (S&P) is proof that the BERT program is working for the country’s economy.

This from Senior Economic Advisor to Government, Dr Kevin Greenidge following the announcement by S&P that Barbados’ rating on its foreign currency debt was upgraded from “Selective Default” to “B-“. The upgrade is an upward movement on the rating scale of six notches.

The economist said this is “quite an achievement” considering the Barbados Economic Recovery Transformation program was implemented just over a year ago.

S&P attributed the rating upgrade to Barbados' foreign currency debt exchange, which has addressed the government's commercial U.S. outstanding dollar debt. 

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 “The upgrade sends a strong statement that BERT is working and speaks to the strength of the adjustment program and reforms being undertaken. The report from S&P speaks to the outlook being ‘stable’ as opposed to ‘negative’ a year ago, and is indicative of the government’s commitment to continue to implement policies that achieve fiscal sustainability. Indeed, the report states that if the government adheres to its ambitious fiscal targets and reform agenda, then it can expect further upgrades over the next year.”

Earlier this year government reached an agreement on its foreign debt, exchanging  approximately US$531 million in new 2029 bonds and US$32 million in past due interest bonds to holders of its U.S. dollar bonds that have been in default since 2018, of which approximately US$677 million, plus accrued interest, was outstanding. The exchange will apply to holders of Barbados' English law-governed U.S. dollar bonds, certain Barbados law-governed U.S. dollar bonds, and a U.S.-dollar loan agreement.

Dr Greenidge said an upgrade of “such a large magnitude” is an indication that “Barbados is back”.

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