Govt. braced for potential ratings downgrade

Govt. braced for potential ratings downgrade
Deputy Prime Minister and Minster of Finance K Peter Turnquest (FILE PHOTO)

NASSAU, BAHAMAS — The Ministry of Finance today called Moody’s signal of a potential downgrade “unfortunate” but not surprising given the extreme strain the COVID-19 outbreak has placed on the Bahamian economy.

Finance minister K Peter Turnquest said the government will continue to be mindful to secure the long-term fiscal stability of the country, and mitigate any risks to its prosperous future.

Turnquest said: “During this crisis we will continue to conduct the nation’s fiscal affairs in a manner that is responsible.”

He continued: “At the same time, we have demonstrated with our response to Hurricane Dorian, and our initial response to COVID-19 economic fall-out, that we will take aggressive actions in the short-term to protect the social and economic welfare of the Bahamian people.

“We will reprioritize and allocate sufficient resources to ensure the Bahamian people are supported through these uncertain times.”

Turnquest added: “Despite the challenging times ahead and the need for significant fiscal adjustments, the Government has demonstrated by its track record and strong commitment to fiscal responsibility, its ability to overcome economic hardship, restore fiscal stability, and to drive economic growth even in difficult circumstances.”

The ministry acknowledged the decision by the international ratings agency to place The Bahamas’ Baa3 ratings on review for downgrade in a press statement.

“This comes at a time when the entire world is going through economic turmoil,” the statement read.

“No country is being spared by the unprecedented public health and economic crisis.

“The timing of the Moody’s review is unfortunate, but the announcement is not surprising due to the economic shock of COVID-19 on the global economy. Large and small countries alike, and multinationals, are facing predictable reviews. In fact, in late March, ratings agency Fitch downgraded the United Kingdom’s sovereign rating.”

Turnquest has previously announced in the House of Assembly that the new fiscal demands associated with the COVID-19 response were expected to exert additional pressure on anticipated deficit numbers for the current fiscal year.

The ministry statement continued: “Further, the expected fall-off in government revenue and inevitable decline in GDP from the global economic crisis and domestic economic shutdown would likely linger into the new fiscal and calendar year.

“These realities mean the Government is reviewing is fiscal targets once again, with a view towards revising them as part of the new budget cycle. Most importantly, the Government’s comprehensive approach continues to be grounded in its commitment to fiscal responsibility.”