Jun 2013 Financial News

Credit rating agency downgrades St Lucia

Jun 21, 2013

CASTRIES—Persistent and severe deterioration in the government’s fiscal position and a resultant steady increase in debt stock are among reasons which the Caribbean Information and Credit Rating Services Ltd (CariCRIS) has cited for its decision to downgrade St Lucia’s credit ratings. CariCRIS is a regional credit rating agency, with a market-driven initiative aimed at fostering and supporting the development of regional debt markets.

In a statement, the agency said it had downgraded its ratings on the government’s debt issues by one notch on its regional scale, taking it from B+ to B or CariBBB. While noting that the government has an adequate level of creditworthiness, based on current ratings, CariCRIS said there were shortcomings in the country’s financial position. The agency pointed to a steady fall in the fiscal current account balance, save for the 2011/12 financial year.

It said St Lucia had moved from a surplus of 4.9 per cent of GDP (gross domestic product) in 2008/09, to a deficit of 1.2 per cent in 2012/13—its first year of deficit in the last decade. That shortfall, according to CariCRIS, was brought on by a reduction in current revenue. “Also contributing to the deteriorating current account balance was the upsurge in current expenditure to 22.7 per cent of GDP in financial year 2012/13 from 20.3 per cent in financial year 2008/09.

“The primary balance was similarly affected and fell from a surplus position of 1.9 per cent of GDP in financial year 2008/09 to deficits in the following four years which continuously grew to 5.6 per cent of GDP in financial year 2012/13,” the statement said. In addition, CariCRIS said while the government had sought to improve the situation by implementing the value-added tax, the regime did not have “an enhancing impact on current revenue over the previous year.”


Source:
Trinidad Guardian
Friday June 21, 2013

http://www.guardian.co.tt/business/2013-06-21/credit-rating-agency-downgrades-st-lucia