By S.Browne. Updated 2:55 p.m., Friday, July 17, 2026, Atlantic Standard Time (GMT-4).
Opposition Leader Dr. Ralph Gonsalves says the New Democratic Party (NDP) administration’s fiscal policies and approach to public debt contributed to St. Vincent and the Grenadines’ latest Moody’s credit rating downgrade, disputing claims from Minister of State in the Office of the Prime Minister Cheiftian Neptune that the decision reflects years of economic neglect under the previous Unity Labour Party (ULP) administration.
In a statement issued by the Office of the Leader of the Opposition, Gonsalves argued that the downgrade to Caa1 was linked to decisions taken by the NDP Government since assuming office, including its 2026 Budget, borrowing strategy and discussions surrounding public debt.
Moody’s Ratings assesses the creditworthiness of governments by evaluating factors including economic performance, government finances, debt levels and a country’s ability to meet its financial obligations.
Gonsalves argued that the country’s credit position remained stable under the previous administration despite facing major challenges, including the COVID 19 pandemic, the eruption of La Soufrière and Hurricane Beryl.
“Between 2016 and 2025, the country successfully maintained a stable B3 rating despite weathering the COVID 19 pandemic, volcanic eruptions, and Hurricane Beryl,” Gonsalves said.
The Opposition Leader also pointed to Moody’s reaffirmation of the country’s stable outlook in December 2025, one month after the NDP took office, arguing that the change in rating reflected the new administration’s policy direction.
“The critical change was not the sudden discovery of ‘old problems’, but rather the market’s reaction to the new administration’s immediate policy direction,” Gonsalves said.
According to Gonsalves, three main factors contributed to the downgrade during the NDP’s first eight months in government.
The first, he said, was the 2026 Budget, which he described as “austere yet reckless”. He pointed to a current account deficit of EC$103 million and claimed the Government sought to address the shortfall through EC$200 million in local commercial market borrowing at interest rates of up to 7.25 per cent rather than through concessional financing.
The second issue raised by Gonsalves was the Government’s public discussions surrounding debt swaps and debt sustainability.
He accused the administration of creating uncertainty among investors, arguing that the discussions affected market confidence.
“The loose talk regarding ‘debt swaps’ and unsustainable debt spooked the market,” Gonsalves said.
According to the Opposition Leader, Moody’s interpreted those discussions as an indication that the Government was considering debt restructuring, which could be viewed by financial markets as a default risk.
Gonsalves also criticised what he described as the absence of a clear economic growth strategy in the Moody’s report.
“For the first time in recent memory, a Moody’s report on the country contained no discussion of economic prospects or growth plans,” he said.
According to the Opposition’s statement, St. Vincent and the Grenadines maintained a B3 credit rating between 2016 and 2025 before Moody’s downgraded the country to Caa1.
On Moody’s rating scale, B3 is the lowest level within the B category, while Caa1 falls into the next lower category, indicating a higher level of credit risk.
A higher rating generally indicates greater confidence in a country’s ability to repay its debts, while a lower rating reflects a higher level of perceived risk. As a result, governments with lower credit ratings may have to pay higher interest rates when borrowing money because lenders require greater compensation for taking on additional risk.
Gonsalves also claimed that the NDP administration had raised only EC$52 million of its projected EC$200 million borrowing target while accepting shorter repayment terms.
He further criticised proposed expansions to the Acute Care Hospital at Arnos Vale, claiming the project could add nearly EC$200 million to public costs without an identified source of funding.
The Opposition Leader warned that the negative outlook attached to the Caa1 rating could affect Vincentians through slower economic growth and increased borrowing costs.
The statement from the Opposition follows comments from Minister of State Cheiftian Neptune, with both sides offering different explanations for the factors behind St. Vincent and the Grenadines’ latest Moody’s credit rating assessment.
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