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Barbados Downgrade in Sovereign Credit Rating Will Not Affect Trade with Caricom

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Barbados Downgrade in Sovereign Credit Rating Will Not Affect Trade with Caricom
Barbados foreign and local currency sovereign credit ratings were downgraded by the US based rating services Standard and Poor both for the long-term and short-term. The long-term was downgraded from BBB-; a lower medium grade to BB+;non investment grade speculative and the short-term from A-3; upper medium grade to B; highly speculative grade. According to www.businessdictionary.com sovereign credit rating is an appraisal of a country’s ability to meet its financial responsibility. This report is both qualitative and quantitative and looks at the economic and political risk of a country. These ratings are generally used by investors to determine the risk associated with investing in that country. I do not think that the downgrade of foreign and local sovereign credit ratings should affect trade between members of the CARICOM and Barbados as trade was a main reason for forming CARICOM single market and economy, these rating are opinions; not facts and it is not the only information investors used to determine suitability of investing or not.

The CARICOM Secretariat states that one reason the CARICOM Single Market and Economy (CSME) was created was to present one market to the world and provide member states with a better and more opportunities to sell and produce goods. The CSME has put in place several policies which include a common external tariff which is applies to all products imported from a country which is not a member state, free circulation of goods imported from outside the region so that taxes are only paid at the first point of entry and common internal and external trade policies which are agreed and negotiated in a collaborated effort. Based on these benefits, not trading with Barbados would not only limit the market for CARCIOM members’ goods and services, but it also will be taking a step back for the region in our efforts to be a single market and economy.

According to www.standardandpoors.com their ratings are opinions on an



References: Discussion # 2 http://www.investinginbonds.eu/uploadedFiles/Learn_About_Bonds/What_You_Should_Know/Market_and_Economic_Influences_on_Your_Bond_Investments/Sovereign%20Credit%20Ratings%20Primer%20-%20SP.pdf 2 http://www.datosmacro.com/en/ratings 3. http://www.nationnews.com/articles/view/standard-and-poors-downgrades-barbados/ 4 http://www.caricom.org/jsp/single_market/single_market_index.jsp?menu=csme http://www.globalization101.org/factors-influencing-foreign-investment-decisions/ http://www.standardandpoors.com/aboutcreditratings/RatingsManual_PrintGuide.html

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