Bahamas, June 7th 2017: Another credit downgrade from Moody’s could soon be ahead, as the International Credit Rating Agency is expressing alarming concern over the recent budget pronouncements with an increase in borrowing of $722M outlined. The agency says the latest budget has sparked alarm, with it forecasting debt-to-GDP will rise until 2019, peaking above 70 percent of GDP, when it had initially expected debt to stabilise this year.
It also adds that it “indicates that The Bahamas’ fiscal outlook is significantly worse than what we had incorporated into our current projections”, as “Revised government estimates point to a higher deficit for fiscal 2017, and deficits (rather than surpluses) in the coming years.
Last week, DPM and Finance Minister Peter Turnquest said with an ongoing Deficit of the magnitude projected for the upcoming year, the level of the Government Direct Charge is forecast to reach $6.8 billion at the end of 2017/18, or a new all-time high of 72.7 per cent of GDP Fiscal Policy beyond 2017/18.
Despite this pronouncement, Moody’s commended The Bahamas government of maintaining realistic goals and targets in lowering the debt to GDP ratio by 2019.Moody’s report says, “The Budget envisions a somewhat optimistic deficit reduction path through fiscal 2020 without material changes to current policy, particularly in a still weak economic environment”.
As to whether another down grading is imminent, the credit rating agency says its investment grade rating remains the same for the moment.
DPM Turnquest has attributed the economic downfall to the bills government has incurred following Hurricane Matthew’s devastation last October.
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