Antigua’s ‘worst banking country’ report gets thumbs down
Monday June 27 2011 | 06:33 AM

Following an investigation into Antigua and Barbuda’s rating as the worst Caribbean country to bank money, Finance Minister Harold Lovell has severely criticised Euromoney magazine for the method that led to that conclusion, and supported a call for government  to work with the opposition to repair the country’s image.

On June 7, a country risk survey published by the European publication placed the country at 178 out of 186 countries surveyed, with an overall score of 9.30 out of a possible 100.

But Lovell has questioned the apparent subjectivity of the ranking, following an investigation by Finance Ministry technicians and the Financial Services Regulatory Commission (FSRC).

“We should not be duped by a false and a dodgy methodology,” he told his colleagues, noting that of the 235 experts whose ratings were included in the survey, only six persons had rated Antigua and Barbuda.

Lovell said the volatility and inconsistency of Antigua’s ratings over the years points to a highly subjective ratings process, which he said is open to manipulation. 

He noted that in 2000, the country was ranked at number 174 and climbed to 186 in March 2010. Since then, the Finance Minister noted, Antigua and Barbuda’s macroeconomic indicators have improved significantly, government finances have improved by 19 percent, and the debt to GDP ratio has been reduced by 22 percentage points, but the country’s position had fallen to even below what it was 11 years ago. 

After the European published its report, Antigua Labour Party (ALP) leader Lester Bird had suggested that there should be a bipartisan response to the issue in order to repair the country’s image.

During his presentation of the FSRC findings, Lovell backed that approach.

“Nobody gains if Antigua sinks because all that we will have as a nation is a boat to take from the bottom of the sea and that is in nobody’s interest,” he said.

“It is in everybody’s interest to pull Antigua up and so I would say, subject to the directive of the prime minister, that this is an approach and a path, with respect to the sector, that I think is necessary and I will take the leader of the opposition’s word at face value, and we will judge not his words but his actions and his deeds.”

In outlining the FSRC findings, Lovell said it was discovered that the Euromoney country rankings were based on a survey of ratings provided by experts and, according to the magazine, “combined with data from the IMF/ World Bank on debt indicators; a survey of debt syndicate managers at international banks on access to capital; and Moodys/Fitch credit ratings”.

He outlined Euromoney’s assessment methodology, which is divided into qualitative and quantitative risk factors, with the former assessing political, economic and structural risk. 

In the case of the Political Risk factors, he said: “Antigua and Barbuda has a stable government, with legislative checks and balances enshrined in the Integrity in Public Life and Freedom of Information Acts. We are paying our debts for the first time in 30 years! We have been doing everything possible from a legislative standpoint to strengthen our regulatory and policy environment. Internet access is extensive and increasing; the consultative process is a regular feature of our democracy and Talk Radio, no matter how vitriolic, is allowed its free reign.” 

Lovell said the score of 17.73 out of 100 in this category, therefore, “defies comprehension”.

The Finance Minister also questioned the 8.5 awarded to Antigua and Barbuda in the Economic Risk category. 

“Even taking into account the misfortune of the Stanford fallout, there are other mitigating factors that should have been considered and resulted in a score substantially in excess of that awarded by the six.

We have a stable currency with an exchange rate that has remained fixed for decades.  Our GDP outlook is in step with many other economies. While unemployment is of concern, we have a robust system of safety nets in place,” he said. “And with respect to Government finances, we have over the past five years improved our management and administrative systems.”

As for Structural Risk, Lovell said that Antigua and Barbuda has an extensive road network, pipe borne water and electricity in over 90 percent of households, schools within 10 minutes of most communities and widespread telephone connectivity. Citizens have unfettered access to education and health care, and human rights are protected and respected, he added, yet the score was 13.75.

Lovell also noted that Antigua and Barbuda scored zero in all the quantitative risk factors – access to capital markets and bank financing, as well as debt indicators and sovereign credit ratings – notwithstanding the steps taken by the administration to reschedule long outstanding external and domestic debt obligations.

“Considering all the criteria listed above and their respective weights, one can be forgiven if he or she were totally mystified as to how Antigua and Barbuda would have been accorded a rating lower than Afghanistan, Iraq and North Korea,” he said.

“On the other hand, the relatively high ratings accorded countries such as Iceland and Greece do not comport with their economic prospects as forecast by a number of reputable multinational institutions.” 

He also questioned the relatively low ratings accorded to Barbados and other Eastern Caribbean countries.