BRIDGETOWN: Political scientist, Dr. Don Marshall, says the system used by financial agency Moody’s to downgrade Barbados’ international rating is flawed and expectations by the company are unrealistic.
Last week, Moody’s announced a downgrade of the standard by which Barbados should be regarded, moving the island’s rating from Ba3 to B3 because of the increasing size of government’s fiscal deficit and expectations of continued challenges at consolidation of spending.
“The reality is that they are looking at a set of indicators and these indicators make for woeful reading,” said Dr. Marshall, a lecturer in government and politics at the University of the West Indies, Cave Hill Campus. “But then they reach for what I call interpretive excess, then to come up with conclusions then it would pursue such a triple-notch downgrade. I think the pace at which they expect Barbados government to respond and to be reformed is unthinkable.”
Barbados’ efforts at fiscal consolidation began following recommendations from an International Monetary Fund team that visited the island last December. Among IMF recommendations was that government cut its overall spending. As a result, the government embarked on a program of job cuts and reduction in a number of social support services.
Marshall criticized the methodology used by Moody’s to determine fiscal consolidation and said it is not fair for the rating agency to assume the country could implement all the changes suggested by the IMF in such a short period.
“Fiscal consolidation at the pace which Moody’s expects, is about making Barbados squeal,” he said. “We cannot in the three months – when they last did their review, or even within a year – undertake the kind of massive overhaul of our social spending.”