St. Lucia’s credit ratings downgraded

Hermisha Rolle, SNO Reporter

Castries, the capital of St. Lucia, one of the centres of commerce on the island. * Photo credit: Castries City Council

Persistent and severe deterioration in government’s fiscal position and a resultant steady increase in debt stock are among reasons which the Caribbean Information and Credit Rating Services Limited (CariCRIS) has cited for its decision to downgrade St Lucia’s credit ratings.

CariCRIS is a regional credit rating agency, which according to its website, is a market-driven initiative aimed at fostering and supporting the development of regional debt markets.

In a press release issued on June 14, the agency said it had downgraded its ratings on government’s debt issues (EC$140 million, US $50 million, and US $38 million) by one notch on its regional scale; taking it from B+ to B or CariBBB.

While noting that government has an adequate level of creditworthiness, based on current ratings, CariCRIS said there were shortcomings in the country’s financial position.

The agency pointed to a steady fall in the country’s fiscal current account balance, save for the 2011/12 financial year. It said St Lucia had moved from a surplus of 4.9 percent of GDP (gross domestic product) in 2008/09, to a deficit of 1.2 percent in 2012/13 – its first year of deficit in the last decade.

That shortfall, according to CariCris, was brought on by a reduction in current revenue.

“Also contributing to the deteriorating current account balance was the upsurge in current expenditure to 22.7 percent of GDP in financial year 2012/13 from 20.3 percent in financial year 2008/09.  The primary balance was similarly affected and fell from a surplus position of 1.9 percent of GDP in Financial Year 2008/09 to deficits in the following four years which continuously grew to 5.6 percent of GDP in financial year 2012/13,” the release said.

In addition, CariCRIS said that while government had sought to improve the situation by implementing the Value Added Tax (VAT), the regime did not have “an enhancing impact on current revenue over the previous year”.

The agency’s release further delved into other aspects of the country’s financial status, hence providing a rationale for its downgrade.

In conclusion, CariCRIS said it expects the government’s fiscal position to remain “tenuous” in the 2013/14 financial year, particularly in light of the recently negotiated wage increase for the civil service. It projected that total public debt to GDP ratio will grow rapidly by year-end.

But with all this, the agency lauded the government stating that “notwithstanding the deterioration in the fiscal position, the ratings on Saint Lucia continue to reflect its monetary and exchange rate stability, underpinned by its membership in a quasi-currency board arrangement and its relatively diversified economic base”.

“Also supporting the rating is an external sector characterized by moderate balance of payments (BOP) performances, relatively low external debt and adequate import cover,” CariCRIS added.

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15 comments

  1. wow morgies calypso hit the nail on the head en rouge

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  2. There is enuf blame to go around for the downgrade. The questiin we now must ask --- what can u, me and gov do???

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  3. Aa so zandolee if u don't like it go to facebook. Anyways BETTER DAYS ARE HERE. We busy doing investigations into how Taiwanese monies are spent. If the Taiwanese had a problem dem wudda stop long time. KENNY STOP SPENDIN TAX PAYERS MONEY ON FRENZ. Do we need to pay jadia's medical bills? Now my 80 yr old granny has to pay property tax. I hv to pay it for her. Hw u spendin my money?

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  4. Well said Royalone

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  5. Lucians we can make a difference, Pray god that our nation turn away from it wicked ways and return to god. He raises Lings and bring down Kings. Kenny fooled the people of St. Lucia and they drank it. He is using the Councils report as a smoke screen to remove focus on his inability to run this country, former PM King did a much better job amidst some of their wrong doings. We need a Dwight Vena And a new crop of politicians to run our country. "LUCIANS WATCH YOUR BREAD" Kenny and company taking all.

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  6. This place is heading to the shithole. Thank you Kenny for saddling my grand children with your debt burdens whilst your 5% continue to get it good.

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  7. YEAH SLP GOOD JOB BETTER DAYS ARE HERE WITH ST LUCIA HEADING DOWN HILL.

    FOR ALL THE BRIGHT GRADUATES WITH GCE AND OBE WE DON'T NEED A KING AS LEADER AS YOU ALL ALWAYS SAY.WE NEED A PRIME MINISTER GOOD JOB ON YOU ALL ACHIEVEMENTS.'BETTER DAYS ARE HERE'.......

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  8. And they want to say that we not heading in the direction of a failed state with a failed leader?

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    • YOU ALL SHOULD COME WITH A BETTER IDEA OR TAKE OVER PRIMINISTERIAL POSITION.

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    • We need to stop throwing this terminology around so loosely- "failed state." Debt does not equal failed state. If so, half of the world's nations would be heading toward 'failed statehood.'

      This simply means that as a nation we need to buckle up, be more frugal, demand more transaparency and accountability from our leaders and stop playing the politic card, be more productive and innovative in dealing with the economy.

      I shudder to think that this kind of thinking resonates in the desires of Saint Lucians- that our country should do well under one administration and fail under another.

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      • Well said Royalone

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      • Not yet failed state but fast approaching FAILING STATE. Using debt to pay debt is a sure recipe for disaster.

        The impending economic collapse can be viewed as a blessing. St. Lucians have never had to fight for anything. They never struggled for freedoms or rights or anything else for that matter. They are not galvanised as a collective unit. Its only in the face to real disaster do we find our true selves. If St. Lucians are up to it, they will either emerge from this disaster of Kenny as a stronger country willing to stand up for their rights and die for it if needs be or they go they way of the Dodo.

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      • You people do not have work to do. All you do is sit behind a pc and write up a whole bunch of crap

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