S&P Downgrades Bahamas for Second Year

NASSAU, BAHAMAS – After yet another downgrade by S&P, Financial Executive Gowon Bowe says some hard steps must be taken in order to achieve meaningful debt management. He added social assistance may have to take a hit.

Jillian Gray has that.

For the second consecutive year The Bahamas has been downgraded by International Credit Rating Agency Standard and Poor’s. The downgrade was not exactly surprising according to Bowe who pointed to the country’s economic hardships over the last two years.

After debt climbed to almost $2.4 billion or 86.6 percent of GDP S&P downgraded The Bahamas to BB-.

In its release Friday, S&P did however say it believes the country is on the right track pegging the outlook as stable. Public finance reform and the economic recovery are currently underway in the tourism sector all pointing in the right direction according to S&P.

For Bowe, The Bahamas must move to a more stable plan that transcends administrations.

If government is unable to close budget deficits or if economic recovery lags, a further downgrade could be looming according to S&P. If it wants to see an upgrade the government would have to demonstrate an ability to raise revenue and show improved economic prospects.

They announced vat reduction to 10 percent and the aggressive stance of the revenue enhancement unit are positive steps however Bowe says growing the economy and managing debt may mean foregoing some services.

Economic Affairs Minister Michael Halkitis has said the government is already taking steps to address the concerns raised by S&P adding economic growth and recovery are top of the government’s agenda.