Aug 2007 Financial News

S&P says rating stable on Barbados

Aug 21, 2007

STANDARD AND POOR'S RATINGS SERVICES has affirmed its 'BBB+' long- and 'A-2' short-term foreign and its 'A-' long- and 'A-2' short-term local currency sovereign credit ratings on Barbados. The country's outlook remains stable.

According to S&P credit analyst Richard Francis, Barbados' ratings reflected improved but still high external pressures resulting from high current account deficits and its relatively high gross debt and interest burdens.

However, he said, the negatives were balanced by political stability and strong governance within both the public and private sectors.

"The Government played a central role in shifting the economic focus toward services and away from manufacturing and agriculture and has taken important steps to reform the pension system, improve the tourism infrastructure, and liberalise telecommunications over the past three years," he said.

"Barbados faces the continuing challenge of increasing tourism prospects and diversifying into new service sectors to generate solid economic growth going forward," he added.

S&P said the fiscal balance was expected to deteriorate modestly in 2007 to a small deficit of 0.6 per cent from a small surplus of 0.2 per cent of GDP in the 2006, as current spending associated with wage agreements backdated to April 2006 takes effect.

Despite fiscal deterioration, net general Government debt was expected to fall to 25 per cent of GDP in 2007.

Francis said the stable outlook reflected expectation that the public sector debt burden would continue to decline over the medium term as economic growth remains buoyant and Government slowly tightens public spending. The current account deficit should continue to ease moderately over the medium term.

Barbados' outlook could be revised to negative, however, if there is greater than expected deterioration in Government fiscal accounts that leads to a concomitant rise in public indebtedness.


Source:
Nation News Barbados
Tuesday 21st August, 2007

http://www.nationnews.com/story/289632133842007.php