Deputy Prime Minister Peter Turnquest.
By Neil Hartnell
Tribune Business Editor
The Government today said Moody’s decision to place The Bahamas’ credit rating on downgrade review was “unfortunate but not surprising” given the “strain” imposed by the COVID-19 pandemic.
Responding to the credit rating agency’s warning that The Bahamas’ sovereign creditworthiness could be downgraded to so-called “junk” status, the Ministry of Finance said in a statement that this nation was far from alone in being subjected to such scrutiny.
It added that the inevitable economic and fiscal fall-out was threatening the credit ratings for multiple countries and multinationals, some of which have already been downgraded.
“The Ministry of Finance acknowledges the decision by Moody’s to place The Bahamas’ ‘Baa3’ ratings on review for downgrade given the extreme strain placed on the recovering Bahamian economy by the spread of the coronavirus outbreak,” the ministry said.
“This comes at a time when the entire world is going through economic turmoil. 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.”
K Peter Turnquest, deputy prime minister and minister of finance, pledged that the Government will balance providing economic and social assistance to Bahamians in need with the long-term goal of achieving fiscal sustainability.
“The Government is always mindful to secure the long-term fiscal stability of the country, mitigating any risks to our secure and prosperous future. During this crisis we will continue to conduct the nation’s fiscal affairs in a manner that is responsible,” Mr Turnquest said.
“At the same time we have demonstrated with our response to Hurricane Dorian, and our initial response to the 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 reprioritise and allocate sufficient resources to ensure the Bahamian people are supported through these uncertain times.”
The Ministry of Finance acknowledged that revenue losses, and increased business support and benefits spending, will impose pressure on the revised $677.5m fiscal deficit target for the 2019-2020 budget year.
The COVID-19 pandemic has also forced it to rapidly reassess, and beginning making adjustments to, its 2020-2021 fiscal year preparations given that ongoing revenue and fiscal pressures will likely spill over into the new budget year.
“The expected fall-off in government revenue, and inevitable decline in GDP from the global economic crisis and domestic economic shutdown, will likely linger into the new fiscal and calendar year,” the Ministry of Finance added.
“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.”
Mr 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.”