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Financial News

Jan 2007 Financial News

Small surplus for Barbados economy in 2007

Jan 15, 2007

A SMALL ECONOMIC SURPLUS, lower Government debt, and an improved current account position are some of the expectations for the Barbados economy in 2007, according to Standard & Poor's (S&P) Ratings Services.

The New York-based ratings agency offered this assessment as it assigned an "A-" long-term local currency rating to a recently issued $100 million Government debenture that has a fixed interest rate of 8.5 per cent and matures on December 31, 2018.

S&P said its ratings on Barbados were supported by the fiscal adjustments currently underway, which were expected to result in a small surplus of 0.2 per cent of gross domestic product (GDP) this year, up from a 0.9 per cent deficit (including the large surpluses of the National Insurance Scheme) in 2006.

It suggested capital spending would taper off, since much of it is associated with the preparation for the 2007 Cricket World Cup. This, the agency stated, should lead to gradually lower net general Government debt, falling to 41 per cent of GDP in 2007 from 45 per cent in 2005, and a gradual fall in the interest burden of more than 11 per cent, versus the "BBB" median of five per cent.

It categorised economic growth prospects for this year as positively "buoyant", thanks to a pick-up in tourism combined with lower capital expenditure.

This, it said, would lead to an improving current account position as the deficit was expected to decline from 11 per cent of GDP in 2006 to six per cent in 2007, and to an average five per cent during 2008-2009 – plus lowered external vulnerabilities that had built up in the past three years.

Nation News Barbados
Monday 15th January, 2007