NASSAU, BAHAMAS — The Bahamas’ borrowing needs could ultimately be slightly higher than outlined in its latest Annual Borrowing Plan, as Fitch Ratings forecasts the government will record a small fiscal deficit during the 2026/2027 fiscal year, despite continued efforts to strengthen public finances and reduce debt.
Fitch said the government’s borrowing plan highlights ongoing fiscal consolidation efforts, with gross financing needs of US$1.024 billion, or 5.5 per cent of GDP, expected to be used entirely for debt repayment.
The credit rating agency also noted that the government is also aiming to use its projected budget surplus of US$223.1 million, or 1.2 per cent of GDP, to increase cash balances.
However, Fitch said borrowing requirements may be marginally higher than outlined in the plan, as it forecasts The Bahamas instead “will run a small deficit of US$64 million,” or 0.4 per cent of GDP, in fiscal year 2026/2027 before achieving its first fiscal surplus of 0.3 per cent of GDP in fiscal year 2027/2028.
“Fiscal consolidation will continue, supported by strong governance, despite pressure from global economic shocks,” Fitch said.
The agency noted that The Bahamas’ recent record of fiscal outperformance presents upside risks to its more conservative projections, although final full-year results for fiscal year 2025/2026 are not yet available.
Fitch projects gross general government debt will continue declining, falling to 65.9 per cent of GDP in fiscal year 2027/2028 from an estimated 70.5 per cent in fiscal year 2025/2026.
That compares with a peak debt-to-GDP ratio of 89.5 per cent recorded in fiscal year 2019/2020.
Despite the progress, Fitch cautioned that debt levels remain high compared with the pre-Hurricane Dorian level of 59.8 per cent of GDP in 2018 and the “BB” category median of 52 per cent.
The bulk of the government’s planned borrowing will come from domestic sources, including US$387 million, or 37.8 per cent of total financing, through Bahamian dollar bonds and US$256 million, or 25 per cent, from the rollover of a note held by the Central Bank of The Bahamas.
External financing will include US$200 million in bank loans, representing 19.5 per cent of total borrowing, and US$181 million from multilateral institutions, including US$100 million in new policy-based loans.
Fitch said the government has no current plans for an international bond issuance but may pursue liability management opportunities if market conditions allow.
The agency also highlighted progress under the government’s medium-term debt management strategy, including efforts to extend average debt maturity and reduce exposure to foreign currency and floating-rate debt.
Foreign currency debt has fallen to an estimated 45.3 per cent of total debt, below the government’s target of 55.4 per cent.
Fitch maintained The Bahamas’ sovereign rating at ‘BB-’ with a stable outlook, citing strong governance and continued fiscal consolidation efforts as key supports for the country’s credit profile.
However, Fitch said high interest costs and debt burdens relative to peers remain constraints on the sovereign rating.
