Political Will Essential To Averting Debt Crisis
BMI View: While we do not see a crisis as imminent, Barbados' deteriorating fiscal picture and weak growth outlook are sending its international borrowing costs sharply higher and leading to an increasing reliance on short-maturity, domestic debt issuance that poses a higher degree of rollover risk. The government is likely to encounter significant political opposition to recently-passed fiscal austerity measures, and we believe the political will to maintain the reforms will be essential to avoiding a debt crisis over the coming months.
Barbados' fiscal picture is under pressure from a weak growth outlook and rising borrowing costs, and while we do not believe a debt or fiscal crisis is imminent, we highlight growing risks. Provided Barbados maintains the political will to pursue its current fiscal austerity agenda, we believe the country will be able to avoid having to restructure its debt burden.
Spending And Revenue Mismatch Getting Worse
|Weak Growth Exacerbating Fiscal Shortfall|
|Barbados - Current Revenue & Expenditure, BBDmn (12-Month Rolling)|