NEW YORK (Standard & Poor's) July 26, 2006--Standard & Poor's Ratings Services said today that it revised its outlook on Barbados to stable from negative.

Standard & Poor's also affirmed its 'BBB+' long-term foreign, 'A-' long-term
local, and 'A-2' short-term currency sovereign credit ratings on Barbados.
According to Standard & Poor's credit analyst Richard Francis, the change
in outlook reflects a fiscal adjustment that is currently underway. This is
expected to lead to a small surplus of 0.2% of GDP in the 2007 calendar year, up from a deficit of 0.9% (including the large surpluses of the National Insurance Scheme) in 2006, as capital spending--much of which is associated
with the preparation for the 2007 World Cricket Cup--tapers off.

This improvement is expected to lead to gradually lower net general government debt, falling to 37% of GDP in 2007 from 40% in 2005, and a gradual fall in the interest burden of over 11%, versus the 'BBB' median's 5%.

Furthermore, buoyant growth prospects for 2007, the result of a pick-up in tourism combined with lower capital expenditure, will lead to an improving
current account position (to an average 5% of GDP during 2008-2009 and 6% in 2007, down from 11% in 2006) and lowering external vulnerabilities that have
built up over the past three years.

Mr. Francis explained that the ratings on Barbados balance still-high external pressures and limited fiscal flexibility with political stability and strong governance within both the public and private sectors. "The government has played a central role in shifting the economic focus from manufacturing and agriculture toward services and recently took important steps to reform the pension system, improve the tourism infrastructure, and liberalize telecommunications," Mr. Francis said. "A key challenge for the country will be to increase tourism prospects and to diversify into new service sectors to
generate solid economic growth after 2007," he added.

Standard & Poor's said that the stable outlook reflects the expectation
that the public sector debt burden will continue to decline over the medium
term as economic growth remains buoyant and the government slowly tightens public spending. It also anticipates that the current account deficit will
ease moderately over the medium term, particularly if equity inflows ebb.

"The outlook could be revised back to negative if the government fails
to rein in its fiscal deficit, leading to a concomitant rise in public indebtedness," Mr. Francis noted. "Persistent high current account deficits
going forward could also place downward pressure on the ratings, particularly
if offsetting equity inflows decline or pressure emerges on the fixed-exchange-rate regime, which underpins Barbados's good inflation performance. It is important to provide an ample cushion of both fiscal and external flexibility to withstand the possible external shocks inherent to a small island nation," he concluded.

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found
on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search.