The downgrade of this country’s credit rating by Moody’s is a true reflection of the economy, says Opposition Leader Arnhim Eustace, who also suggested that the government is misinterpreting the earlier evaluation of the economy by the International Monetary Fund (IMF).
Moody’s Investors Service on Friday downgraded St. Vincent and the Grenadines’ (SVG) government bond ratings to B3 from B2 and changed the outlook to negative from stable, the second downgrade in two years.
B1, B2, and B3 credit ratings are judged as being “speculative and a high credit risk”.
The downgrade came at the end of a week in which the IMF said preliminary findings suggest that the Vincentian economy registered “modest growth” in 2014, but the government is having difficulties meeting its obligations and keeping the budget together.
Speaking on his weekly radio programme on Monday, Eustace, an economist, noted that our B3 is at 16 on the rating, which has 21 levels.
He further noted that SVG’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,” Eustace said of the downgrade.
“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. This place is catching hell. 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,” Eustace said.
The IMF said last week Monday, at the end of its Article IV consultation, that when complete, Argyle International Airport can contribute to an uptick in economic activity.
Eustace, however, said that the IMF was assuming that the airport will be complete by 2016, adding that he doubts this will be the case.
The government has said that the airport will be substantially complete by the end of this year, and operational by the mid-2015.
Eustace said that the IMF’s statements were 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,” he said.
He pointed out that while the IMF said it sees a lot of positive signs, the airport looms large.
“None of them ain’t fooling me,” Eustace said, noting that although the IMF said a new airport generally impacts positively an economy, it did not say this will be the case in SVG.
He said, that instead, the IMF is asking questions about whether there will be investments in hotels and airlines.
“Nobody fooling me with these words and telling me the IMF gave a good report. The report is not good at all and is purely speculative…
“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,” Eustace said.
He noted 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, adding that the IMF also spoke of signs of fiscal stress in the economy.
“All those in the IMF report. I ain’t hear anybody speak about those,” he said.