NASSAU, BAHAMAS- Finance Minister Michael Halkitis defended the Government’s decision to transfer excess borrowing proceeds into the National Investment Fund, insisting the move was lawful and part of a broader debt management strategy that has strengthened The Bahamas’ fiscal position.
Speaking at a press conference at the Office of the Prime Minister on Thursday, Halkitis sought to address concerns raised by Opposition Leader Michael Pintard and the Free National Movement over the Government’s handling of nearly $700m in excess borrowing proceeds.
The finance minister said the Government undertook two major liability management exercises, including the country’s 2024 debt-for-nature swap. “We did a debt for nature swap back in 2024, where we paid off about $220 odd million dollars in a high interest loan and as well, I think it was like $80 million dollars in a bond,” he said.
“We got better conditions, lower interest costs. We were able to spread out the payment and we saved some money. We were able to save, I think it was $142 million dollars, I think, over the course of 15 years for the improved management of our marine protected areas.”
Halkitis said the Government later carried out another liability management exercise that refinanced bonds coming due around 2028 while raising additional capital.
“We paid off about, I think it was about $700 million dollars in outstanding bonds and additional money that was raised was not spent, was put in a national investment fund for future infrastructure development in particular,” he said.
The minister explained that the Government intentionally raised more financing than was immediately needed because larger bond issuances tend to attract stronger investor participation.
“We didn’t want to do just $700 million in the refinancing, because what we find is if you do larger size, up to a billion, there’s more liquidity, more people buy it,” Halkitis said.
“It’s more attractive for other investors to get involved because there’s more liquidity.”
Halkitis also rejected suggestions that the transfers were unlawful, saying the Government acted on legal advice throughout the process.
“We are satisfied we get the input from our lawyers, from the bank’s lawyers, from the investment lawyers,” he said.
“So, we’re satisfied that everything was done in accordance with the law.”
Halkitis argued the transactions have strengthened the country’s standing with international investors and ratings agencies.
“To be able to do that sort of transaction and get improved condition is a very positive thing for the country, extremely positive,” he said.
“You see the results of it in two ratings upgrades in the past year.”
He added: “A lot of that is because we are able to demonstrate to financial companies and rating agencies that we can go out to the market and do successful transactions.”
The Opposition has questioned whether the Davis administration bypassed Parliament in transferring borrowing proceeds into the National Investment Fund, arguing that all public borrowing should first flow through the Consolidated Fund and receive parliamentary approval before being redirected.
