Regional credit rating agency CariCRIS has reaffirmed its scale ratings assigned to Barbados of CariBB (local currency) and CariBB- (foreign currency) with a stable outlook.

CariCRIS, which is the Caribbean Information and Credit Rating Services, said the rating is supported by fiscal consolidation continuing despite COVID-19 pressures and other unanticipated shocks, growing foreign currency reserves and good financial sector stability indicators.

In addition, Barbados was cited for having strong tourism fundamentals that suggest robust post-COVID-19 rebound potential. According to CariCRIS, its ratings of Barbados were tempered by the country’s high debt to gross domestic product (GDP) ratio and the uncertainty of its economic recovery.

With reference to its assessment of a stable outlook, the regional ratings agency said it, “is based on our expectation of a successful realignment of the home-grown Barbados Economic Recovery and Transformation (BERT) programme with the International Monetary Fund (IMF) that is expected to reduce debt to GDP to 60 per cent by 2035/36 and introduce more stringent fiscal planning and accountability.”

Possible upgrade of the rating

CariCRIS explained that it could upgrade its rating opinion as BERT objectives are achieved. “However, the stable outlook balances the preceding with the challenge of creating sustained and moderate economic growth as well as current risks to achieving a post-COVID-19 economic recovery, such as, the emergence of new variants that stifle tourism as well as vaccine hesitancy hindering herd immunity,” the ratings agency said.

Earlier this month, the IMF said it was making available to Barbados US$24 million after indicating that the island continues its strong implementation of the comprehensive BERT plan, which is aimed at restoring fiscal sustainability, increasing reserves and unlocking growth potential through structural reforms.

On November 5, the Washington-based financial institution concluded the Article IV consultation with Barbados as well as its sixth review of Barbados’ economic reform programme supported by an arrangement under the Extended Fund Facility (EFF).

The IMF noted that the prolonged novel coronavirus pandemic, along with the twin natural disaster shocks of volcanic ashfalls from neighbouring St Vincent in April and Category 1 Hurricane Elsa in July, pose a major challenge for the tourism-dependent economy.