Bowe: Now is not the time to ‘beat on our chest’
NASSAU, BAHAMAS – While The Bahamas has avoided a credit downgrade from Standard & Poor’s, a well-known accountant said yesterday now is not the time to ‘beat on our chest’.
Gowon Bowe told Eyewitness News the country needs to secure a higher investment grade rating.
“Ultimately I think we have to be careful that we don’t get too high and too low because sometimes we overact to what not I would call exuberant news,” he said.
“It is reassuring to say they haven’t seen any radical negative impact because of the things we are going to have to take on with Hurricane Dorian because we had headroom to absorb some of these elements. Equally we shouldn’t be seeing that as an opportunity to beat on our chest.
“They have not increased our credit rating. They have not further decreased our rating and we should be looking to get back into a high investment grade category.”
The Ministry of Finance yesterday noted that despite the unprecedented impact of Hurricane Dorian and the resulting economic fallout, The Bahamas maintained its credit rating in the latest report by S&P Global Rating.
The ministry noted that although there was an anticipated revision to the outlook from stable to negative, the country’s BB+ sovereign credit rating was affirmed.
“The assessment by S&P is not surprising given the conscientious adjustments we made to our original spending and borrowing plans so as to recover from the catastrophic impact of Hurricane Dorian,” said K Peter Turnquest, Deputy Prime Minister and Minister of Finance.
“Although these deviations from our fiscal plan will not be permanent, we anticipated they would affect our outlook.”
“We are pleased to see that the Government’s various fiscal reform efforts were acknowledged and commended in the report, as they have contributed to the country’s strengthening fiscal institutions and our capacity to deal with substantial external shocks.”
Turnquest said: “It is no small accomplishment to weather damages equivalent to one quarter of your annual economic output and still maintain your credit rating.”
“Notably, even though the report foreshadows potential economic fallout from the coronavirus pandemic, S&P still expressed confidence in the checks and balances put in place to prevent further erosion of our creditworthiness.”
Turnquest said: These included the Government’s demonstrable increase in fiscal transparency and reporting and the focus and progress on institutional reform.”
Bowe told Eyewitness News that while returning to an A rating will take some time, this nation must be cognizant of its current position and that its fiscal headroom is slowly being dissipated by these external events we can’t control.
“Ultimately we need to be in a position to create greater headroom over time so we are able to at least have a better opportunity to increase the rating and get back to where we were before,” Bowe said.
Last October, on the heels of Hurricane Dorian Standard & Poor’s had stated that very early signs suggest The Bahamas is well positioned to handle the ongoing fallout from Hurricane Dorian. At the time it said it was evaluating the short-to-medium-term credit effect, if any, of Hurricane Dorian on The Bahamas’ (BB+/Stable/B) rating.