(Jamaica Observer) The US-based rating agency, Moody’s Investors Service, has downgraded the credit ratings of the Barbados-based Caribbean Development Bank (CDB) by one notch from Aaa to Aa1.
CDB president Dr Warren Smith told the bank’s annual board of governors meeting yesterday that the downgrade followed a routine examination of the region’s premier development bank and that “we are disappointed at the decision”.
But he said the new ratings were being accepted “in today’s heightened environment of uncertainty” and that “our risk management practices need to be strengthened.
“To that end we are undertaking an indepth 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,” Smith said.
He said it is also noteworthy that Moody’s had also concluded that a financially strong CDB “is very much a function of the degree of financial and economic resilience which obtains in all of its shareholder countries, both borrowing and non-borrowing”.
The non-borrowing countries include Canada, China, Germany, Italy, United Kingdom, Colombia, Mexico and Venezuela.
Smith said that as the CDB moves to strengthen its internal systems, it was also urging member countries “to rapidly implement structural and other reforms which lead to improved macro-economic fundamentals”.
Figures released here show that while the region stepped up efforts to contain the widening of fiscal deficits and burgeoning debt as economic growth stagnated, there had been a “steep” reduction in CDB’s approval and disbursement levels.
The bank said that approvals, including grants, totalled a modest US$167 million last year, down from US$300 million the previous year and that disbursements followed a similar pattern, declining by an estimated 48 per cent to US$168 million in 2011.
“Therefore the net transfer of resources between CDB and its borrowing member countries amounted to only US$15 million in 2011, considerably below net resource transfers of US$180 million in 2010,” the bank said.
