Bridgetown, Barbados — In a statement issued on Monday, Barbados Prime Minister Freundel Stuart responded to last week’s long-term sovereign credit ratings downgrade by Standard & Poor’s (S&P) Ratings Services to ‘B’ from ‘BB-‘.
Stuart said his government remains firmly committed to the strategy for growth and development on which it has embarked, noting that it is a strategy based on Barbados’ established competitive strengths in tourism, international business and finance, and food and beverages, and on the island’s potential for green energy.
It is a strategy led by investment and outstanding entrepreneurship by the private sector, supported by government incentives and world class financial regulation and legal safeguards, he explained.
“The strategy is anchored on our fixed exchange rate to the US dollar, which is protected by an adequate cushion of foreign exchange reserves. The growth and adjustment strategy has already begun to show positive results,” Stuart said.
He said that the falling trend in foreign reserves which Barbados was experiencing at this time a year ago has been arrested, ever since February of this year. The private sector has been given a boost with the investment that is underway in the hotel sector, the success of the cultural and sporting festivals, and the take off in the green energy sector.
“Tourist arrivals have stabilized, and tourist spending is on the rise. There are encouraging prospects for the winter tourist season. Underpinning this strategy is an ambitious but necessary medium term programme of fiscal consolidation, designed to reduce the fiscal deficit to sustainable long run levels, and to make the public sector more efficient,” Stuart said.
“That programme was front loaded, with the ten percent reduction in the public sector workforce at the beginning of the year, and a suite of revenue and expenditure measures to secure a substantial correction in the first full year of the programme,” he added.
According to Stuart, the stabilisation of the external accounts is evidence of the impact of the fiscal correction. It is testament to government’s strong commitment to the fiscal strategy that recently announced measures have been taken and will be taken, to bring the fiscal deficit reduction back on target.
“There are those who appear to believe that Barbados lacks the capacity to execute our strategy for growth and development, and that we will be forced to appeal to the IMF to take charge of our affairs. We Barbadians know better,” Stuart said.
“We have set out on a course of action which is crafted to our needs, and we are resolute in pursuing that strategy to the successful revival of economic growth in 2015 and beyond. We are confident we will succeed because we believe in ourselves, and we know that Barbadians will take the hard decisions, in defence of our currency and our standard of living.
“We have been this way before, under even more trying circumstances, and we have prevailed, through steadfast determination and the will to succeed. This we will do again, he concluded.