The Ministry of Finance acknowledges the decision by credit rating agency Moody’s to downgrade The Bahamas’ credit rating to Ba2. As part of the ongoing assessment of the country’s fiscal and macroeconomic performance, the Ministry of Finance has been in close communication with Moody’s since April, when The Bahamas’ credit rating was placed on review for downgrade given the extreme strain placed on a yet recovered Bahamian economy by the spread of the coronavirus outbreak.
As we noted then, Moody’s decision, comes at a time when the entire world—first world countries and developing nations alike—is experiencing unprecedented economic turmoil and exacerbated fiscal challenges.
The Bahamas is not alone in confronting these adverse credit rating assessments, arising from crisis altering circumstances not of our making and entirely outside of our control. Just recently, Italy and India saw their credit ratings downgraded.
As Moody indicates in its assessment, the decision to downgrade The Bahamas from a Baa3 to a Ba2 rating is a direct result of the economic shocks caused by the COVID-19 pandemic, amid a yet weakened economic situation caused by Hurricane Dorian. Fair-minded Bahamians know that our current state of fiscal affairs is a result of these external shocks and not because of our performance as a Government.
Indeed, Moody’s has pointed to the Government’s significantly improved fiscal credibility and effectiveness—a direct result of our accountable, and responsible fiscal policy framework and consolidation efforts.
In presenting the Budget, I was very clear that our reprioritization of economic relief and investment in the Resilient Bahamas plan would result in a significant, although temporary, deviation from our balanced-budget fiscal targets. This was inevitable given the size of theCOVID-19 economic shock, which caused a complete shutdown of our primary industry.
In response to this crisis, we crafted a national budget that recognizes the importance of the Government’s contributions to the economy at this time, and the critical need to support and protect families, communities, and businesses. In keeping with our commitment to fiscal responsibility, these short-term decisions were made while always considering the country’s long-term sustainability.
Notwithstanding Moody’s rating decision, the Government is confident that its policy measures have appropriately focuses on protecting Bahamians, stabilizing our economy, and transforming the current crisis into an opportunity for our future prosperity. We are assured that our fiscal plans for the short to medium term horizon will provide the basis for achievement of a sustainable fiscal outcome and strengthen macroeconomic growth.