NASSAU, BAHAMAS — Difficult decisions will have to be made and many reform efforts tat will need to be accelerated to ensure this nation has a sustainable response to the COVID-19 pandemic, Deputy Prime Minister K Peter Turnquest said yesterday as ratings agency Standard & Poor’s lowered this nation’s credit rating to junk bond status.
The move comes just days after ratings agency Moody’s predicted an eight percent contraction in local economic activity this year due to the COVID-19 fall-out, and has placed the country’s Baa3 rating on review for downgrade.
The Ministry of Finance yesterday acknowledged the position of S&P Global Rating, which decided to lower The Bahamas’ credit rating from ‘BB+’ to ‘BB’, based on the fallout from the COVID-19 pandemic.
“This is an unfortunate position we find ourselves in, but it is similar to virtually every other country in the world,” said Turnquest.
“Our focus is on containing the spread of the virus, mitigating the economic fall-out and planning for a strong recovery. There will be difficult decisions to make on the road ahead, and there are many reform efforts that need to be accelerate to ensure we have a realistic and sustainable response, but this Administration is prepared to take those actions.”
“We note the significance placed on the strength of our recovery for future assessments, and we feel confident in our track record,” he continued.
“We have significantly strengthened our institutions over the past three years; we have demonstrated steady leadership that knows how to support economic growth, and we have proven our ability to stabilize the country’s finances at sustainable levels.”
The Ministry of Finance noted that the action taken by S&P comes at a time when the entire world in going through economic turmoil.
S&P slashed its own global forecasts this week, predicting that the impact of coronavirus lockdowns would result in the world economy contracting by 2.4 percent. The United States economy and the euro zone were also expected to slump 5.2 percent and 7.3 percent respectively.
“The hallmark of this Administration has always been fiscal propriety and fiscal order,” he said.
“Even though we will see a significant departure from our fiscal consolidation efforts to respond to this unparalleled event in the economic life of The Bahamas, the Government will respond to the current crisis with due regard for the country’s long-term fiscal stability,” said Turnquest.
“We will continue to implement the measures necessary to support the country’s public health needs, and to protect the social and economic welfare of the Bahamian people. Further, we are in the thick of the budget planning process for the new fiscal year.
He said: “We are consulting with a full range of private sector and civil society stakeholders on the proposed fiscal and economic measures; we are being proactive with our planning to ensure we do as much as we can to mitigate the impact of the economic fall out and to set the stage for a strong and sustained recovery.”