Daily Archives: March 20, 2013

US State Department: Barbados politicians ask for bribes and business equity in exchange for favours

US State Department Barbados

The US State Department just published its annual Investment Climate Statement for Barbados. There is some wishful thinking in the report, but also some solid reasons why Bim is a good place for offshore investment. As far as the politicians asking foreign businesses for bribes or shares… That’s news?

You can read the whole thing yourself, but here’s our take on a few interesting spots in the report – the good, the bad and the ugly…

Barbados – The Good

Openness To Foreign Investment

The Government of Barbados, through Invest Barbados, strongly encourages foreign direct investment in Barbados.

The government offers special incentive packages for foreign investments in the hotel industry, manufacturing, and offshore business services.

Foreign nationals receive the same legal protections as local citizens. The police and court systems are unbiased in commercial matters, and the government operates in an essentially transparent manner.

The Bad

On December 20, 2012, Moody’s downgraded Barbados’s rating to one notch below investment grade. Moody’s also gave Barbados a negative outlook, meaning that a further downgrade is more likely than an upgrade. With this downgrade, Moody’s rating is in sync with Standard & Poor’s, which downgraded Barbados in July. Fitch Ratings does not rate Barbados. Moody’s cited two main reasons for this downgrade: poor economic growth prospects and government deficit/debt levels. These are generally the same two reasons Standard & Poor’s cited in July.

The regulatory system can be slow at times, and some companies have complained that the Ministry of Finance does not give adequate justification for rejecting a license.

According to the U.N. World Investment Report, Barbados Foreign Direct Investment (FDI) peaked at $464 million in 2008. This was followed by a decrease to $247 million in 2009. In 2010 and 2011 FDI totaled $290 million and $334 million respectively.

The Real Ugly Stuff

Corruption is not a major problem in Barbados, but some U.S. companies have reported unfair treatment by Barbados’ Customs and Excise Department.

Other U.S. companies have reported efforts by political actors to trade political support for payment or partial project ownership.

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Filed under Barbados, Corruption, Economy