Eustace says Moody’s downgrade is true assessment of economy

By Admin Wednesday November 26 2014 in Caribbean
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KINGSTOWN: Opposition Leader, Arnhim Eustace, says the decision by the U.S.-based rating agency Moody’s to downgrade St. Vincent & the Grenadines’ bond ratings is a true reflection of the Caribbean nation’s economy.


Eustace also suggested that the Dr. Ralph Gonsalves administration is misinterpreting the evaluation of the economy given by the International Monetary Fund (IMF).


Last week, Moody’s Investors Service downgraded St. Vincent & the Grenadines’ government bond ratings to B3 from B2 and changed the outlook to negative from stable, the second downgrade in two years.


The downgrade came at the end of a week in which the IMF said preliminary findings suggest that the local economy registered “modest growth” in 2014, but that the government is having difficulties meeting its obligations and keeping the budget together.


Speaking on his weekly radio program on Monday, Eustace, an economist, said the B3 ranking is at 16 on the rating, which has 21 levels and that the island’s outlook has changed from “stable” to “negative”.


“The time has passed when we overlook these things. They all have implications for our people. All of them have implications for our people.


“Yet the Prime Minister says we are doing well. And I see them interpreting some of the statements that the IMF made, ‘Oh, we are doing so well.’ We are not doing well. What the IMF is saying is, assuming you can finish the airport, they can see some pick up; that is essentially what they are saying,” said Eustace.


The IMF said last week that when completed, Argyle International Airport can contribute to an improvement in economic activity.


However, Eustace said that the IMF was assuming that the airport will be complete by 2016, and that the statement was speculative.


“When it comes to the IMF, you have to look to see the language that is used. They are not effusive people; they are technical people. They don’t gush with good news. That’s not how they write or how they think. None of them ain’t fooling me,” said Eustace, indicating that although the IMF said a new airport generally impacts positively an economy, it did not say this will be the case in St. Vincent & the Grenadines.


Instead, the IMF is asking questions about whether there will be investments in hotels and airlines, said Eustace.


“Nobody fooling me with these words and telling me the IMF gave a good report. A lot of it is speculation. They have not come forward and say definitely this is what is going to happen.


“They are assuming that the airport will finish in 2016, they are assuming that investors will take a lot of interest because that is so, but they want to see it happen,” he said.


The government has said that the airport will be substantially complete by the end of this year, and operational by mid-2015.


Eustace said that the IMF had also said that the government is having difficulties meeting its obligations and keeping the budget together.


“The same thing they tell us is such a glowing report,” he said.

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