Standard & Poor in the United States, in an examination of the ongoing phenomenon of regime changes in the Caribbean, says one of the main reasons for the trend is the growing unpopularity of incumbent governments. In an article, titled “Political Change Reflects Country-Risk Dynamics.
In The Caribbean,” Standard & Poor examines the importance of country-risk indicators in explaining the changing political winds in the region. The article by the influential international rating agency looks at crime statistics, corruption perception index, governance indicators, and other socioeconomic variables and their influence on the electorate’s preferences, as well as sovereign creditworthiness.
It said the political landscape in the Caribbean region has changed considerably over the past several months, making room for opposition parties and signifying an end to the often long-standing rule of the outgoing administrations. “News like this is what scares Prime Minister Keith Mitchell from calling an immediate general election in Grenada,’’ said one official of the National Democratic Congress.
“The indication is everywhere and from all quarters that the writing is on the wall for him and his NNP government.’’Olga Kalinina, credit analyst with Standard & Poor, said an overview of the trend in country-risk indicators over the past several years provides a useful illustration of the growth in popular dissatisfaction that ultimately resulted in the widespread shift in political power in the Caribbean region.
”Interestingly, sociopolitical trends correlate highly to changes in creditworthiness in the low speculative-grade rating category, which should come as no surprise,” said Kalinina.”Political factors, including the predictability and transparency of policymaking, are a prominent risk in speculative-grade countries.
Therefore, any noticeable change, either upward or downward, in country-risk indicators is likely to cause a reassessment of the credit quality of these low-rated sovereigns,” she concluded.
