The Bahamas maintained its Baa3 negative credit rating from Moody’s Investor Service yesterday, despite the company suggesting that the country’s strengthening tourism sector and continued foreign direct investment projects will help sustain the country’s growth over the next fiscal year.
The company did, however, warn that The Bahamas could face a downgrade in the next 18 months if the government fails to “reduce deficits to levels that would reverse the trend of rising debt ratios and lead to a stabilization in government debt metrics”.
The report also hinted at a further deterioration of the government’s fiscal strength if “contingent liabilities stemming from state-owned enterprises and the Bank of The Bahamas (BOB) … materialize on the government’s balance sheet”.
Moody’s said it expects growth in the 1.5 to two per cent range in The Bahamas between 2018 and 2019, and applauded the country’s above-average growth of 0.5 per cent last year.
Last August, the country avoided a downgrade after the newly-elected Minnis administration presented its first budget.
The economy grew by 1.4 per cent in 2017.
Deputy Prime Minister and Minister of Finance Peter Turnquest issued a statement late Tuesday responding to the credit rating announcement stating, that the rating hold “represents a critical first step in addressing and reversing years of fiscal mismanagement”.
“I am pleased to report to the country that this independent assessment reflects stabilization in our sovereign credit profile following four years of successive rating downgrades,” the statement read.
“The Government’s combination of economic initiatives, including: the introduction of focused fiscal measures; the imminent introduction of fiscal responsibility legislation; moves to stimulate domestic economic growth through support for Bahamian entrepreneurs and small businesses; and the substantial pipeline of major investment within the country will lead to strong and sustained economic growth and a stable macroeconomic trajectory for the country.
“The government of The Bahamas remains committed to executing its economic agenda to stimulate growth, contain expenditure and restore fiscal health to public finances.”