OFFICIAL STATEMENT
Senator, the Honourable Michael Halkitis, Minister of Economic Affairs
Responds to Downgrade of Credit Rating by S&P
Responds to Downgrade of Credit Rating by S&P
The government is aware of the decision by S&P Global Ratings to downgrade The Bahamas’ sovereign credit rating from BB- to B+ with a stable outlook.
The rating reflects the continued economic and fiscal impact of Hurricane Dorian and COVID-19, as well as the failure of the previous administration to implement meaningful fiscal reforms to existing revenue models and ill-conceived debt management strategies. The imprudent policy choices related to borrowing over the past 4-years have increased our external indebtedness despite the existing domestic capacity.
The Davis Administration understands the urgency of this matter and the need for immediate action to reverse the trend of consecutive downgrades in recent years. This is why a Supplementary Budget was necessary— to ensure alignment with our priorities and to proactively address the social, economic, and fiscal challenges facing our nation.
We are already taking steps to address the concerns expressed in S&P’s report beginning with our balanced approach to stimulating the economy and providing needed relief to the Bahamian people. We are doing this without further contributing to an increase in the projected national debt in the Supplementary Budget. Economic recovery and growth are our first priorities in addressing this issue.
We remain committed to strengthening the Fiscal Responsibility Act and public financial management legislation, as well as enhancing revenue administration and reimagining revenue policy. We have retooled the Revenue Enhancement Unit and are launching the expert-driven Revenue Policy Committee to propel these efforts. Our goal is to have a 25% revenue-to-GDP ratio by 2025.
We are also in the process of implementing debt reduction strategies and facilitating more effective debt management guided by the Public Debt Advisory Committee.
By all indications, the nation is primed for economic growth for the foreseeable future and the Davis administration remains dedicated to leading our national recovery while simultaneously addressing the nation’s fiscal woes. The Supplemental Budget begins to lay the foundation for continued and equitable economic advancement through the implementation of sound, holistic economic and fiscal policies. Future budgets will reveal the full extent of the policies and programmes we are putting in place to pilot our country in a new direction.
