NASSAU, BAHAMAS- Prime Minister Philip Davis said The Bahamas’ return to international capital markets marks a turning point in the country’s economic recovery, describing the $1.067 billion bond deal as a major step forward in restoring fiscal stability, investor confidence, and national development.
Wrapping up the 2025/26 Budget Debate in the House of Assembly, Davis noted that the government has completed its first international bond issuance since 2022, raising over $1 billion in U.S. dollars to refinance older debt.
“This transaction allowed us to repurchase $767 million in older debt, extend our repayment timeline by over two years, and reduce near-term obligations by $451 million,” he told Parliament. “This aligns with our debt management strategy… to extend average maturity, enforce prudent liability management and lower the cost of debt over the medium-term.”
The Prime Minister emphasized that the deal was well-received by global investors. “With this new issuance, investor confidence was strong, with the bond nearly four times oversubscribed,” he said. “This reflects the international market’s growing trust in our economic reforms and fiscal discipline.”
The new bond was priced at a yield of 8.25 percent, significantly lower than the previous rates the country had been paying. Davis explained, “If we look at what our bonds were trading at before going to market this year, it was 8.79 percent, but once we went to the market, our final rate was 54 basis points lower at 8.25 percent.”
He added, “If we look at the effective interest rate charged on the last note offering, it was 13.5 percent. The repricing to 8.25 percent was 525 basis points lower, showing the consolidation of our international yield curve, which shows that we are on the right track.”
He continued: “What we’ve done by going back to the international capital markets is similar to what many Bahamians try to do when managing their own debt,” he continued. “We took all those separate, expensive payments and rolled them into one new loan with a better interest rate and more time to pay it back. And just like a bank won’t give you a better rate unless they trust your ability to pay it back, international investors won’t either. But they saw what we’re doing — our fiscal discipline, our reforms, our plan — and they responded with confidence.”
According to Davis, the results speak for themselves. “That’s trust in the Bahamian economy. That’s trust in this government’s stewardship.”
Davis said the benefits of the bond transaction go beyond numbers on a spreadsheet. “The savings from this transaction — millions of dollars — can now be used to build clinics, fix roads, invest in our Family Islands, and deliver real results for Bahamian families,” he said.
He pointed to major infrastructure investments that are now possible because of improved fiscal positioning, including what he called the single largest airport redevelopment programme in Bahamian history.
“Yesterday, we signed a $20 million contract for a new runway in Long Island,” Davis said. “This is the first step in a major $150 million airport redevelopment programme that we will roll out over the next 12 to 18 months.”
“When you add the separate investments in Exuma, North Eleuthera, and Bimini, we are looking at more than $300 million in total.”
“These are not vanity projects,” he added. “These are foundational investments that will make our islands more accessible for domestic and international flights, safer for travellers, and more attractive to investors, tourists, and Bahamians looking to return home and build a future.”
Davis noted that there were no new taxes or fee increases in the 2025/26 Budget. Instead, the government is providing targeted relief by cutting VAT in key areas.
“We’re reducing VAT from 10 percent down to 5 percent on essential everyday items, including baby diapers, adult diapers, feminine hygiene products, prescription and non-prescription medicines, and medical and dental supplies,” he said. “These are real savings for working people.”
Responding to criticisms from the Opposition that the government’s fiscal projections were unrealistic or based on weak data, Davis said that assertion was “false.”
“This Government has projected steady, responsible increases in revenue… and these projections are not pulled from thin air,” he said. “They are backed by concrete policy actions, outlined clearly in both the Budget Communication and the 2025 Fiscal Strategy Report.”
Davis also addressed concerns about unpaid invoices and arrears, which some have used to question the credibility of the government’s fiscal reporting.
“The unpaid invoices refer only to outstanding payments at the end of December 2024. Conversely, arrears refer to obligations carried from the last fiscal year, FY2023/2024, and earlier,” he explained. “The $269 million… includes both unpaid invoices and arrears combined.”
“Far from hiding these obligations, this administration has taken a responsible and transparent approach: we report them in the national accounts, we publish the data publicly, and we incorporate their gradual settlement into our medium-term fiscal framework.”
He insisted that the government was not trying to obscure anything. “Transparency is not a weakness; it is a sign of leadership. This Government is confronting its obligations with clarity, courage, and commitment, and the people of The Bahamas deserve no less.”
Davis concluded that the surplus projected in the 2025/26 Budget is a sign of progress, not politics. “The surplus is not just an accounting line,” he said. “It’s how we generate the fiscal space to sustainably reduce outstanding obligations, invest in development, and expand opportunity island by island.”
“When we say the economy is improving, it’s not a matter of opinion. It’s a matter of fact,” he said. “Better days are not just promised — they’re being built.”
Davis noted that the government will be tabling a supplementary budget following his communication. “The primary purpose of the supplementary budget is to account for the offsets approved during FY2024/25,” he said. “The supplementary budget will facilitate the reallocation of funds in the amount of $16.1 million from capital expenditure to recurrent expenditure.”
He clarified that this reallocation does not change the overall spending figures. “Since this is a reallocation of expenditure, the total expenditure figure remains the same as estimated in the original budget. This brings the total revised recurrent expenditure to $3.28 billion and the capital expenditure to $328.4 million.”
The supplementary budget also accounts for a modest revenue increase. “The supplemental increase in revenue totaled $27 million, which brings the revised total revenue estimate to $3.57 billion,” Davis said.
As a result, the revised deficit stands at $42.8 million, or 0.3 percent of GDP. “The 0.3 percent is the lower end of our deficit target range for this fiscal year,” he noted.
