by Tony Best

The Tens of millions of dollars Caribbean countries are spending on Cricket World Cup 2007 may be an investment risk whose long-term returns can¹t be predicted.

Olga Kalinina, an analyst of Standard & Poor¹s perhaps Wall Street¹s leading credit rating firm, has said while some countries could afford to spend the large sums on World Cup preparations and might end up reaping significant benefits if everything turned out well, others were making political gambles by putting large sums into stadiums and other related projects that might otherwise be spent on roads, social services and capital development.

While she didn¹t comment on Barbados, Trinidad and Tobago and some of the other venues, she cited Grenada which was rebuilding its infrastructure after the devastation of Hurricane Ivan in 2004 and Jamaica, whose government is spending a considerable sum at a time when its revenues have fallen short of expectations, creating money shortages.

Kalinina, an Economist, said while it was obvious some countries stood to fare much better than others from the World Cup games, the investments left unanswered questions. Kalinina declined to say if all the Caribbean nations were putting too many of their financial eggs into the World Cup basket.

She said she believed the benefits from the competition would differ from country to country, depending on its economic situation. "It is definitely in the power of certain islands to benefit and to really take this event to their advantage" she said

The trouble with Grenada, though, is that it was spending money on the World Cup at a time when it must rebuild its infrastructure after Hurricane Ivan. "In Grenada there are some definite question marks. You are in a situation in which your fiscal position doesn¹t have a lot of flexibility. You do face some revenue shortages and you do face pressure on capital expenditure", she said.

"Still, you decide that a certain portion needs to be spent on the rebuilding of, let¹s say the stadium and other World Cup-related projects. You are, in a sense, taking a risk, making a bet. On the other hand, you are rebuilding all of the hotels, actually you are building more while your current occupancy levels are very low.

"Once again you (Grenada) are taking a risk, betting that in 2007 you will have all of these tourists coming back and after that all the new facilities will be filled by tourists and will not be under-used. So, in this sense, it¹s a risk.

"The World Cup matches will definitely happen but at this point for Grenada, it¹s a substantial risk for all of this investment". Kalinina doesn¹t monitor the economic performance of Barbados or Trinidad and Tobago, St. Lucia, St. Kitts-Nevis or Guyana and therefore didn¹t comment on their World Cup spending.

However, another S&P analyst said in January that while Barbados would gain significantly from the World Cup Cricket in 2007, including the finals, the economic jury was still out on the long-term future returns on its overall investment.

(Reproduced from the March 17, 2006 issue of the Nation newspaper of Barbados)