Macroeconomic Forecast Barbados

The government's issue of a further BBD100mn of domestic debt is concerning, given our bearish outlook on the island's sovereign credentials and fiscal trajectory. The bonds mature in 2031 and come with a coupon of 7.75% - Barbados' public debt was approximately US$8.56bn of which outstanding treasury bills stood at US$1.19bn. We are becoming increasingly concerned about the ability of the government to narrow its fiscal deficit, which we are forecasting to come in at 8.5% of GDP in 2011 and 7.0% of GDP in 2012. This will continue to weigh on public debt levels going forward.

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