Moody’s downgrade, a call for action – Eustace

Moody’s downgrade of the Government’s rating indicates that “a lot of action needs to be taken to improve the performance of the economy”, Opposition Leader Arnhim Eustace said Wednesday.{{more}}

Moody’s Investors Service on Tuesday downgraded St Vincent and the Grenadines’ rating to B2 from B1.

“We are in fact below what is called investment grade for credit rating, even when we are at B1,” Eustace said at a New Democratic Party press conference in Kingstown.

He said Moody’s is saying the nation has “a lot to be concerned about and a lot of action needs to be taken to improve the performance of the economy…”

He said there was limited scope for Moody’s upgrading the rating, “given what they have observed during their visit to St Vincent a couple months ago.

Moody’s said it sees “limited potential for upward rating changes in the immediate future”.

Eustace said economic planners should be “more open and straightforward” about the measures needed for economic improvement.

“It is no point hiding,” he said, adding that there must be a blend of austerity and stimulus.

He, however, said the nation must choose among the austerity measures.

“I look at their impact. And there must be also some stimulus for the productive sectors of the economy.”

He said the 2 per cent projected growth in the economy this year, will depend on the actions of government.

“Notice, Moody’s slip a little further back. They are saying up to 2013 somewhere between 1.5 and 2 per cent. So, they have an even less optimistic point of view than the IMF (International Monetary Fund).”

“We expect the government will find it difficult to rationalize spending and achieve the fiscal consolidation necessary to stabilize the debt and place it on a sustainable trajectory in the near term,” Moody’s further said.

Eustace added: “So, other countries in the world, who also got a B2, we are comparing unfavourably even with those in the same category as us…

“The point is, the forecast, the years ahead are fraught with major difficulties if we don’t manage our finances and our economy in a proper manner,” he said.

He said people often take opposition discussion of these matters lightly.

“But those who have the responsibility, and those whose professional life and living depends on giving accurate assessment, they don’t have that luxury, or their companies will go out of business. So they tell you as it is,” he said of Moody’s (kentonchance@searchlight.vc)