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It comes as no surprise that Moody's Investors Service has
slashed its rating of the Caribbean Development Bank (CDB) from AAA
to AA1 and Standard & Poor's has issued warnings of growing
debt concerns in the Caribbean region.
What is surprising is that this rating was not lower given the
sovereign debt and economic performance issues in the region
following the collapse of Stanford's empire, IMF country
management and the on-going spectre of more expropriation of
foreign-owned property.
The financial ministers of Antigua & Barbuda would like to
pretend that this is an external matter that will have little
consequence. The reality, however, will undoubtedly be reflected in
higher borrowing costs for any development in Antigua and the wider
Caribbean region, with greater risk adversity and increased
investor reluctance.
Whilst Antigua & Barbuda has never had a credit rating of
its own, because its lacks the political will and declines the
light of scrutiny on its financial affairs, Moody's action
signals a growing impatience amongst investors to tolerate risk
without transparency and adherence to accepted good international
practise.
In fact, it is precisely reasons such as Antigua's serious
shortcomings that negatively influence the confidence of depositors
and investors in the Caribbean Development Bank itself, resulting
in reduced capital to lend to these higher risk zones and
nations.
The spiral, if unchecked, becomes self-perpetuating
Dr Warren Smith, President of the Caribbean Development Bank
informed his board of governors that the downgrade was not
surprising in today's "environment of
uncertainty".
Adding, "We are undertaking an in depth examination of our
risk management framework and we will implement appropriate
recommendations as we build resilience to the more dangerous world
which we now occupy."
Time will tell if the officers of CDB will make Antigua's
future access to capital more contingent on economic prudence and
adherence to constitutional commitment, in order to ensure its own
survival and ability to lend to the other, more responsible nations
in the Caribbean.
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