On Nov. 20, 2013, Standard & Poor's Ratings Services lowered its long-term rating on Barbados to 'BB-' from 'BB+' and affirmed the short-term rating at 'B'. The rating outlook is negative.
The downgrade reflects the mounting external pressures associated with a persistent current account deficit and external financing challenges, as well as the ongoing high fiscal deficit largely because of a substantial fall in government revenues as a result of the weak economy.
The twin deficits have strained the country's international reserves. They have fallen significantly over the past six months to below the monetary base, reserve coverage of which we generally view as important in supporting a pegged currency. On a gross basis, the international reserves cover nearly two months of current account payments, down from more than three months as of year-end 2012.